Velvet Civil War, Phase Three, 1863

Britain can't restrain itself form harrassing USA shipping and two weeks later Canada is in the USA, except for Halifax, off the rail lines. The USA has built up it's rail stock in contemplation of a war and promptly extends it's railroad to Halifax over the summer and fall of 1863. There's lots of farms and villages to supplement the manpower and supplies coming from the railhead. The roadbed is built up to thirty miles ahead of the rails going down, so progress is rapid.
The battle of Halifax precedes on schedule. Bombardment, countervallation, musket charges, etc. The British surrender when their position is no longer tenable.
California promptly secedes from the USA since they are exposed to attack by Britain. This secession sticks because Britain has enough on their plate as is. Attempts to blockade the USA have problems with leakage through the unsympathetic CSA lines and with USA commerce raiders. Even worse, eliminating USA merchant marine competition is impossible because most shipowners register in the CSA or the WSA.
After a frustrating 18 months the British make peace.
 
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