Winfield Scott, 'Old Fuss and Feathers', was the ranking general of the US military in the spring of 1861. He was also 75 years old, weighed 300 pounds, and was wracked by gout. He was no field commander. Robert E. Lee was considered one of the more brilliant officers in the army at that time. He was respected, capable, and experienced. He was recalled to Washington to take a commission to Colonel at Scott's insistence to Lincoln, but the recall was in actually for more than that, as Scott knew he couldn't lead this war, and knew only one man he wanted to take the reins.

On April 12, Fort Sumter was fired upon. On April 18th, Lee was to meet with Scott. Rumors were already in the air that Virginia was going to declare for the Confederacy, but they had not yet announced it, even though the process had begun by then. Prior to his meeting with Scott, he first met with Francis Preston Blair, an adviser to the President, who Lincoln had sent to sound Lee out and unofficially convey the offer that Scott was going to officially lay before him that morning: Elevation to two star rank, and effective command of the military effort against the Confederacy. Scott would remain in rank, but Lee would be his de facto designated successor to take over once he retired, and in the interim, direct the war in most practical terms.

Scott knew his limitations, and needed a deputy who would be capable of prosecuting the war in the field, and Lee had been far and away his first choice, and recommendation to Lincoln for the post. Scott's opinion truly knew no bounds, having declared that if one man were to lead the defense of the country, "I would say with my dying breath, let it be Robert E. Lee". Advising Lincoln of this, Lincoln agreed to the promotion and appointment.

Lee told Blair what his answer was, despite Blair's repeated attempts to convince him otherwise, but nevertheless Lee dutifully reported to Scott, where he reaffirmed his refusal to take up arms against the South and against his home state - a tad ironic of him to tell Scott, himself also a Virginian - "Lee, you have made the greatest mistake of your life, but I feared it would be so" he is reported to have said. To be sure, it was a tough decision for him by all accounts, and after telling Scott he could not lead a war that may require the conquest of Virginia, he continued to wrestle with it. The Confederacy had offered him a one star commission in March, when he only knew he was going to be a Union Colonel, but he had declined that as Virginia remained uncommitted at that time, not even sending a response. The initial vote against secession on April 4th seemed at first that it might even prevent him from having to be placed in that position, but by the middle of the month, in the wake of the call up for 75,000 volunteers on April 15th, Virginia was clearly sliding away. Even as late as April 14th, Lee had given muted, if positive, words for the Union, praising (Southern) Major Anderson's hopeless but honorable stand. Still though, at least until Virginia was officially out of the Union, he was not settled on resigning his command, and thus if it remained, he felt that it was his duty to accept, since, as he wrote to Scott two days later, he was hard pressed to "separate myself from a service to which I have devoted all the best years of my life and all the ability I possessed."

As it turned out, his internal - and external, as he consulted with his brother Smith later that day, himself caught in the struggle - debate was for nothing. The 19th saw the announcement that the Secession Convention had voted in secret two days earlier for secession. It would not be official until a referendum the next month, but any chance of Lee changing course was now passed by. Observing her husband upon hearing the news, Mary Lee called it "the severest struggle of his life". He wrote his resignation the next day, alongside a note of apology for Scott - "Be pleased to accept my most earnest wishes for the continuance of your happiness and prosperity, and believe me, most truly yours...". On Scott's part, he "mourned as for the loss of a son."

It is again somewhat ironic that this drama played out between two Virginians, one feeling that he was honor bout to his state, the other demonstrating an honorable path of Union, responding to fears that he might take the same path to note "I have not changed. I have not thought of changing. Always a Union man" - not that it prevented some Virginians from first trying to recruit him, and upon refusal lambasting him, especially compared to the 'noble Lee' - "[...] two names will be held up to the execration of mankind-that of Benedict Arnold and your own...".

With Lee gone, the next choice Scott considered was Albert Sidney Johnston, who commanded the Department of the Pacific, but he too was a Southern mad and resigned before any offer was even made. Running out of qualified options, Joseph K.F. Mansfield was suggested by Scott too. He commanded the Department of Washington, but had very little to make him stand out. In the end, a mere Major, Irvin McDowell would be the man on which command eventually fell. He was a decent staff officer with no field experience worth mentioning. Scott knew him well, as McDowell had been on his staff previously, but thought little of the choice, which was effectively forced upon him by Salmon P. Chase, the Secretary of the Treasury. The choice was a poor one for many reasons, angering many officers senior to him - for which he refused two stars and took only one - and of course, he was in command at Bull Run which should speak volumes.

Sources:

Davis, William C. Crucible of Command

Eisenhower, John S.D. Agent of Destiny

Horn, Jonathan. The Man Who Would Not Be Washington

Sears, Stephen W. Lincoln's Lieutenants

Robert E. Lee was a favorite of General Winfield Scott. Scott publicly singled Lee out for praise after the Mexican-American War, and in 1854 called him "the best soldier in Christendom."

In February 1861, Captain Lee was stationed in Texas. When the state seceded, Lee's commanding officer General David Twiggs surrendered his U.S. Army garrison, resigned from the U.S. Army, and accepted a Confederate commission. Lee returned to Washington, D.C., where he was offered promotion on March 28. General Scott later told others that he offered Lee much more that day: "If you remain by the old flag... You will be placed in supreme command of the armies of the United States, subject only to a nominal command in myself." Scott's statement was ambiguous; did he mean to offer Lee full command, or simply a generalcy and an army? In any case, Lee swore an oath of loyalty, and accepted promotion to colonel.

On April 15, 1861, President Lincoln called all states which had not seceded to mobilize their militias in order to put down the Confederate insurrection. Virginia's government had called a convention to discuss secession and this request swung Virginia decisively toward the Confederacy. On April 17, the convention vote to secede (pending confirmation by a referendum). The same day, Colonel Lee received a letter from his cousin inviting him to a meeting with Francis Blair, one of the founders of the Republican Party.

When the two men met on April 18, Blair was clearer; he said President Lincoln had authorized him to offer Lee promotion to general, and command of the field army assembling in northern Virginia. Lee declined on the spot, and then dutifully went to Scott's headquarters to inform his old patron in person.

On April 20, as arrests of southern sympathizers began in the north and Winfield Scott's "Anaconda Plan" was activated, Lee resigned his commission in the U.S. Army. Three days later, he assumed command of Virginia's militia.

Our sources for this are firsthand accounts from Lee and Blair, as well as secondhand accounts from sources that discussed the meeting with Scott.

Sources:

The link above, from Encyclopedia Virginia

The Marble Man: Robert E. Lee and His Image in American Society by Thomas Lawrence Connelly

Civil War High Commands by John Eicher and David Eicher