For a while, nothing happens and all seems to be cool.
The Bellipotent 74, it was earlier mentioned, was sometimes dispatched as a scout instead of just being another part of the English fleet.
Well, the Bellipotent was also occasionally sent out on more important service because the higher-ups knew that Captain Vere was an excellent seaman. In addition to the qualities naturally to be expected in a commander, he had knowledge and ability.
While the Bellipotent was out on one such mission, they spot a frigate (type of ship) of the enemy. The frigate realizes it is much smaller and so turns up its sails and takes flight.
Captain Vere follows in pursuit, but they eventually give up the chase because the other ship is smaller and faster.
Vere's a bit disappointed, pacing up and down the deck, when John Claggart approaches to see him.
Claggart stands in the place usually marked out for inferior men who want to have a word with the captain. If the master-at-arms is standing there "only some exceptional cause would, according to established custom, have warranted that" (18.3).
Vere notices Claggart, and it's worth mentioning here that he knew nothing of Claggart until very recently. Last time they were home, Claggart replaced the previous master-at-arms who had become disabled, but that was the beginning of their acquaintance.
Claggart tells him that, during the recent chase, he finally gathered enough evidence to suspect that one of the men on board the ship might be up to something.
Claggart vaguely alludes to the unusual means by which the English fleet has been gathering men (taking in criminals and the like), and Vere becomes insistent and tells him to speak directly.
He says, "Be direct, man; say impressed men" (18.7).
Claggart acts very subservient and says that he thinks this man may be stirring the men on board toward some sort of movement. He says he feels the weight of responsibility he is taking on his shoulders because he knows what the consequences might be for the man he is accusing (hanging).
Claggart begins to allude to the recent Nore Mutiny. He begins to say he hopes that the fate of the Bellipotent won't be the same as a ship in the mutiny whose captain was murdered, but Vere promptly cuts him off. (Note how history is becoming an accomplice in this accusation against Billy.)
The captain can't quite fathom how presumptuous and rude Claggart is being. He suspects that Claggart is intentionally trying to alarm him, but he does not know why.
Vere knows that he should quickly squash any sign of rebellion after the Nore Mutiny. Yet he also thinks that he might give too much credence to the idea of impressed men if he jumps too quickly at the warning of his subordinate. There is also something forced and unnatural in Claggart's manner that disturbs the Captain.
Vere asks Claggart to name the man he has been alluding to, and Claggart says, "William Budd, a foretopman, your honor" (18.14).
Vere is astonished. Claggart notes how Billy was insubordinate right from the beginning when he jumped up on the mast to say goodbye to his old crew. He suggests that the reason Billy makes sure to get along so well with all the sailors is because he doesn't want anyone to be able to say a bad thing about him when the time comes.
Vere thinks for a moment. Though Billy doesn't speak with his officers much, Vere has been very impressed with him from the beginning. He had complimented Ratcliffe on giving him such a fine man, and saw Billy's salute to Ratcliffe as but another sign of good faith – a surprisingly good-natured way of dealing with arbitrary enlistment.
Vere had even thought of suggesting Billy for the captain of the mizzentop (a less demanding but more rewarding job than foretopman) so that they could work together more.
As he gathers his senses, he scolds Claggart for coming to him with such a foggy tale. He tells him to produce better evidence and reminds him that "there is a yard-arm for the false witness" (18.18).
Claggart acts indignant and then offers a series of statements Billy supposedly made that suggest he is guilty beyond any doubt (not even the narrator deigns to tell us what these statements are).
Vere is usually pretty good at reading people, but here his intuition is clogged. He knows that he is more suspicious of Claggart than of Billy, but debates as to how he should proceed.
He knows he should ask Claggart to substantiate his claims, but he resolves to move the conversation into his cabin so as to be more discreet and not to arouse suspicion in the men.
He tells a hammock-boy named Albert to go find Billy (who is currently off duty) and to tell him to go to the captain's cabin.
Vere then tells Claggart that when he sees Billy about to come in, he too should enter and they will settle things there.