Purchased for dispatch duty because of her speed, Despatch was assigned to the North Atlantic Squadron and joined the fleet in December 1873 at Key West, Florida, in anticipation of war with Spain over the seizure of the American filibustering steamer Virginius by the Spanish Navy corvette Tornado.

After lengthy diplomatic negotiations, 102 survivors were delivered on board the U.S. Navy sloop-of-war Juniata, and Virginius was ordered to be turned over to Captain W. D. Whiting, Chief of Staff of the North Atlantic Squadron.

From 1874 to 1877, Despatch carried out special duty assignments from her base at Washington, D.C., and at various times operated with the North Atlantic Squadron along the United States East Coast and in the Gulf of Mexico.

After extensive repairs, Despatch was recommissioned on 8 June 1880 for use as a training ship and cruised along the U.S. East Coast with cadet engineers from the United States Naval Academy at Annapolis, Maryland, on board.

Despatch was again out of commission at Washington, D.C., from 23 September to 19 October 1880, then operated principally in the Potomac River and the Chesapeake Bay and along the U.S. East Coast from Norfolk, Virginia, to Maine until 1891, carrying out special assignments.