The North Carolina Squadron ended 1861 with one last skirmish against the Union ships stationed at Hatteras Inlet. At about 7:00 a.m. on 5 December 1861, the Raleigh and the Fanny made the nearest approach yet to the inlet, running up to within three miles of the anchored ships.
The 7 December 1861 issue of the New Bern Daily Progress reported on the December 5th action at Hatteras Inlet. It stated that “on the morning of the 5th instant, the steamer Raleigh, commanded by Lieut. Commanding J.W. Alexander, and the prize steamer Fanny, Jas. L. Taylor (Tayloe) commanding, ran in almost under the guns of the fort and fleet at Hatteras, and invited the vandals to a test of metal by sending them invitations numerous and we hope effective, in the shape of a rifle 32-pounder and other equally destructive missiles. Nothing, however, was accomplished, except one or two shell, which, bursting in rather close proximity to the fleet, caused a very perciptible commotion among them.”
Captain Werden, commander of the Stars & Stripes, opened fire on the approaching rebel ships, directing the working of the guns himself. His shot fell about two miles short. The Curlew and Fanny immediately responded. Advancing as if nothing had happened, they approached a mile nearer than on any other occasion. The Underwriter joined in with her 86-pdr., followed by the Putnam and Ceres. Only the shot from the Underwriter came near the two rebel gunboats.
The first Confederate shot burst over their own bow according to one observer, but fragments of their second shot came within three lengths of the transport S. R. Spaulding. Captain Howes of the Spaulding responded with his 12-pdr. rifled cannon. The rebel gunboats retired around 8:15.
Between 20-30 shots were exchanged during thr skirmish, causing no damage to either side. The rebel ships advanced slowly during all of the firing. The only Union vessel in motion was the commissary ship Flounder.