The narrator thinks that to determine for certain whether or not Vere is sane is like trying to decide where one color of the rainbow ends and another begins. Each reader will have to decide on his own based on the events narrated in the story.
The tragedy with Billy could not have come at a worse time. After the recent insurrections, everyone is tense and each English captain needed to have "two qualities not readily interfusable – prudence and rigor" (21.3).
What is particularly tragic about Billy's case, though, is that the initial victim (Billy, the falsely accused) now becomes the criminal, and the initial criminal (Claggart, the false accuser) now becomes the victim. Legal right and wrong seems to go directly against moral intuition, but there's no way for Vere to get around it.
Vere deviates from custom in a couple of different ways, and a number of people will later be critical of him.
For one, he tries to keep things extremely secret, and as a reader we might wish that he just keeps Billy in his cabin until he can report the situation to the Admiral.
But Vere's logic is that, if word leaks out about what has happened, then he could have real trouble on his ship. Thus he must deal with the situation quickly.
Though Vere is very strict about his duties as Captain, "he was no lover of authority for authority's sake" (21.8). Thus he is happy not to have all the moral responsibility on his own shoulders, to be able to delegate it to the men of the drumhead court.
The way Vere picks the men of the court is also a bit irregular, picking an officer of marines, a sea lieutenant, and a sailing master. Yet Vere is just trying to pick out the men who might best be able to deal with a complicated moral dilemma as is present in Billy's case. Most sailors don't know much about much except the sea.
The court is held in the Captain's cabin, the same place where the event took place. Billy is still in the stateroom, but is brought out for the trial.
Vere acts as the only witness in the case and recounts all that happened to the drumhead court without admitting any details. The men are extremely surprised at the accusations made against Billy Budd, and ask him if it is all as Vere said.
Billy says that yes, Captain Vere tells the truth, but the initial accusation Claggart made against him is not true.
Vere says, "I believe you, my man," and you can hear the emotion in his voice as he says it (21.13).
Billy says God will bless him for that.
The court then asks if there was previous malice between he and Claggart, and he says that there was not. He says that after Claggart lied to his face, "I had to say something, and I could only say it with a blow, God help me!" (21.14).
The court begins to understand everyone's odd behavior coming into the case. They ask Billy if he knew of any gathering trouble amongst the crew.
Billy pauses, and they assume that it is due to his stutter. In reality, though, he is thinking back on his encounter with the afterguardsman. He doesn't want to speak out against his fellow crew members, though, so he keeps silent.
Lastly, they ask why Claggart might have so maliciously lied against Billy in the first place.
Bill tries to make an answer, but the question is "unintentionally touching on a spiritual sphere wholly obscure to Billy's thoughts" (21.19).
He tries to come up with something, but just looks to Vere for help. Vere says that such a question arises honestly enough, but there's no way to know; especially considering that the only man who does know is slumped dead in the corner of the room.
Vere points out that the only thing that matters is the deed itself (Claggart's death) and who is responsible to it.
Billy looks at Vere, not yet understanding the full import of what he has said (that Billy will be ruled guilty, moral sympathies notwithstanding).
The court understands that there is also some hidden meaning in Vere's statement, and they become a bit more suspicious that he is suffering from some mental disturbance.
The court points out that if other members of the crew were allowed to testify they might be able to shed some light on why Claggart disliked Billy so much.
Vere admits that this question is a mystery, but he says, "it is a 'mystery of iniquity,' a matter for psychologic theologians to discuss" (21.22). He again emphasizes that all they have to judge is the prisoner's deed.
The men are all hesitant, and the first lieutenant asks Billy if he has anything else to say for himself. He looks to Vere, whose glance seems to indicate that he should be silent. Billy says that he has nothing more to say.
The marine takes Billy back to the stateroom, and the drumhead court begins to debate a decision.
For awhile, Vere stares absently out the porthole "to windward upon the monotonous blank of the twilight sea" (21.25). When they become silent, however, he begins pacing.
He pauses and examines their faces, and then spends a moment gathering their thoughts. The narrator thinks that he will have to pander to their simple minds because he is so much more sophisticated than they are.
When he does begin to speak, his pedantic and obviously educated manner gives some credence to the idea that he is too high-brow. But the same men who make the accusation would agree that there's not a better Captain on the seas.
He tells them that he can tell they hesitate due to compassion. He too feels it, but says that they must be mindful of their obligations, that they are dealing with a practical case.
He says that, as far as natural justice is concerned, there is "nothing but the prisoner's overt act to be considered" (21.28).
He compares their duty to that in wartime. If they judge that the war is fought for good reasons, that is a happy coincidence, but they will have to fight either way.
Here, it is their job to act out the law, and "however pitilessly that law operate in any instances, we nevertheless adhere to it and administer it" (21.28).
He again observes that their hearts are moved, and urges them to overcome it. Pausing a moment, he thinks that perhaps it is not their hearts, but their private consciences. He again says that there is no room for private conscience in the matter.
Vere begins listing the facts: Billy killed a superior officer with a blow, which constitutes a capital crime.
The officer of the marines says, "Ay, sir, in one sense it was. But surely Budd purposed neither mutiny nor homicide" (21.34).
Vere admits this is so, but notes that they are acting under the Mutiny Act, which is a direct descendant of the Articles of War. The main point is to root out impressed men, and by the code Budd has committed an act of mutiny.
As Vere says, "Budd's intent or non-intent is nothing to the purpose" (21.35).
Vere tells them they are prolonging proceedings that should be wrapped up.
The sailing master asks if they convict him, but give a lesser penalty.
Vere explains that if they were to do so, the sailors, who are not so clever as to understand nuanced decisions, would think that they were weak. He reminds them that they are ultimately battling against mutiny, and thus must be perceived to be strong by their men.
Lastly, Vere thinks that if Billy could know how conflicted they are he would take pity on them for the hard decision that they have to make.
Vere crosses the deck, looks out the porthole, and again goes silent.
The members of the court don't agree with him in all particulars, but none of them feel adequate to argue with him. His final appeal to their duty as sea officers also strikes a chord with them and makes them realize the severity of the case with which they are dealing.
The narrator thinks that they were probably reminded of a similar case in 1842 on board the U.S. brig-of-war Somers, where an execution took place just a few days away from home.
The narrator quotes a writer who said, "Forty years after a battle it is easy for a noncombatant to reason about how it ought to have been fought. It is another thing personally and under fire to have to direct the fighting while involved in the obscuring smoke of it" (21.41).
In short, hindsight is 20/20 and, in cases of wartime, making practical decision is extremely difficult.
Billy is sentenced to death and will be hung in the morning since night has already fallen.