Although the Americans suffered severe setbacks for months after independence was declared, their tenacity and perseverance eventually paid off. During August 1776, in the Battle of Long Island in New York, Washington's position became untenable, and he executed a masterly retreat in small boats from Brooklyn to the Manhattan shore. British General William Howe twice hesitated and allowed the Americans to escape. By November, however, Howe had captured Fort Washington on Manhattan Island. New York City would remain under British control until the end of the war. By December, Washington's forces were nearing collapse, as supplies and promised aid failed to materialize. But Howe again missed his chance to crush the Americans by deciding to wait until spring to resume fighting. In the meantime, Washington crossed the Delaware River, north of Trenton, New Jersey. In the early morning hours of December 26, his troops surprised the garrison at Trenton, taking more than 900 prisoners. A week later, on January 3, 1777, Washington attacked the British at Princeton, regaining most of the territory formally occupied by the British. The victories at Trenton and Princeton revived flagging American spirits.  

In 1777 Howe defeated the American army at Brandywine in Pennsylvania and occupied Philadelphia, forcing the Continental Congress to flee. Washington had to endure the bitterly cold winter of 1777-1778 at Valley Forge, Pennsylvania, lacking adequate food, clothing and supplies. The American troops suffered less because of shortages of these items than because farmers and merchants preferred exchanging their goods for British gold and silver rather than for paper money issued by the Continental Congress and the states.