It captured three more blockade-runners during April and July.
In September 1862, it was transferred to the South Atlantic Blockading Squadron and arrived off Charleston, S.C., on the 19th and stayed there until the end of January 1863.
The night of January 31, 1863, the Mercedita was at her station off Charleston when the CSS Palmetto State and CSS Chicora, Confederate ironclads, attacked, hoping to recapture the blockade-runner Princess Royal which had been captured two days earlier. It had been carrying engines for new Confederate ironclads.
The Mercedita was attacked by the Palmetto State which rammed her, ripping a hole in the keel, piercing the boiler and putting the ship in sinking condition. The Palmetto State challenged the Union ship saying, "Surrender or I'll sink you!" Unable to move or bring its guns to bear, the Mercedita had no other option buy to surrender.
The Confederates, anxious to engage other Union ships in the surprise attack, accepted the paroles of the Mercedita's crew, and, without putting a prize crew aboard, sped off the engage the USS Keystone State and Quaker City.
The crew of the Mercedita made temporary repairs and, contrary to their surrender, limped away to the Union base at Port Royal where more repairs were made and from there to Philadelphia for a complete overhaul.
The Confederates were incensed about the incident.
Once You Surrender, No Take Backs. --Old B-Runner