Lookout, Maryland, would consist entirely of "Galvanized Yankees", Confederate prisoners willing to take an oath of loyalty to and fight for the Union in exchange for their freedom. Eventually, six such regiments would be formed. Dimon's new commission was effective March 18, 1864. Dimon was promoted to lieutenant colonel on April 2, 1864, and, on August 7, 1864, was promoted to colonel and command of 1st United States Volunteers at age 23. During their first months of service, the 1st U.S. Volunteers saw combat in the vicinity of Elizabeth City, North Carolina, in the summer of 1864. However, Lt. Gen. Ulysses S. Grant, then in command of the Union army, decided that prisoner-of-war units should not be employed against their former comrades writing, "it is not right to expose them where, to be taken prisoners, they might surely suffer as deserters." Therefore, in August 1864, just as Dimon assumed command of the regiment, the 1st U.S. Volunteers were transferred to Fort Rice in the Dakota Territory. After travel by rail from New York and steamship up the Missouri River, the regiment marched the final 250 miles, reaching Fort Rice on October 17, 1864. As commander of the post, Dimon was instructed to complete the construction of the fort, aid settlers, and manage relations with Native Americans in the region. After enduring a frigid winter, the 1st U.S. Volunteers were further troubled in the spring of 1865 by deteriorating relations with the Sioux people. These included the Yanktonai and Lakota people who perceived Fort Rice as a dangerous encroachment on their homeland and led repeated raids against it. Dimon, who had no experience in Native American relations, nonetheless was successful in fostering a positive relationship with the Yanktonai Chief Two Bears and, together, they began to build a growing alliance with the Yanktonai people. The positive relations were fleeting, however, as the arrival of additional troops in Dakota triggered a large attack on Fort Rice by the Sioux on July 28, 1865. The 1st U.S. Volunteers were successful in driving off the attack and the garrison survived that summer, according to historian Michele Butts, largely due to Dimon's "endless drills and strict discipline." As commandant of Fort Rice, Dimon took a hardline approach to restricting illegal trade with the Native Americans, ordering the seizure of steamboats coming up the Missouri River and refusing to allow traders to pass without appropriate licenses