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9 million people were in confederacy in 1865 that were not slaves .
There were several reasons. First was the fact that the Confederacy was formed to protect the institution of slavery which was against fundamental British values. Although there were certainly some people in Britain who had no problemwith slavery in America, much the largest block of people, in all classes, were against it. A second reason was that recognising the Confederacy would inevitably have drawn Britain into the war. That was a war they were not prepared to fight, both in the sense of having the necessary men and materiel and in the sense of having the desire to fight it. Britain had no vital interest at stake in the success of the Confederacy and thus any advantage they might conceivably have gained from a possible Confederate victory would not have been worth the sacrifice involved. Lastly, and this is related to the second point, even had they come in, that would in no way have guaranteed a successfull outcome.
Wahunsonacock Powhatan born in the 1500's founded the Powhatan Confederacy, now known as the Powhatan Nation. Tribute was believed to be in the form of copper, skins and beads.
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Because a lot of people still think that the confederacy centered around slavery and racial opression so a symbol of it offends such people.