Billy is skilled and capable in his role as the foretopman on board the Indomitable.

When Billy's fellow crew members have free time from work, they create what could be described as an "aerial club." They recline on the smaller sails, chat, share stories, and entertain themselves.

Billy's friends tease him in a friendly manner because he takes his responsibilities seriously and responds promptly when called upon. This sense of duty comes from seeing someone receive a harsh punishment when he was on his prior ship - they were whipped on their bare back and felt deeply humiliated. This experience made Billy vow to never act in a way that would lead to such severe consequences. Despite this, Billy is surprised to find himself occasionally getting into minor trouble. He cannot understand, for instance, how his hammock could be so messy that he receives a reprimand from one of the ship's corporals.

Billy gets to know Dansker, an aged veteran who had served with Nelson on the Agamemnon in the past. Dansker was given the nickname "Board-her-in-the smoke" after he took part in a boarding operation from the Agamemnon. During the operation, Dansker was hit in the face by a shot, which left a scar resembling "a streak of dawn's light falling" across his face, which was already of a dark complexion.

Dansker is known for being cynically concise and careful with his words. Initially, he finds Billy's presence on a naval warship to be comical due to their contrasting nature and Billy's naivete. However, this amusement quickly transforms into fondness and concern. Unlike the other young sailors, Billy has consistently shown Dansker warmth and admiration when interacting with him.

When Billy confides in Dansker about his problems, Dansker cautions him that the master-at-arms, whom he derogatorily refers to as "Jimmy Legs," is hostile towards him. Billy finds this hard to believe because Claggart has always treated him well. Dansker tries to clarify that Claggart's display of kindness is actually an indication that he harbors ill will towards Billy.

On the following day, the ship is rolling due to the wind, and as a result, the soup that belongs to Billy spills on the newly cleaned deck. Coincidentally, Claggart happens to be passing by at that exact moment. At first, he doesn't seem to mind the spill, but then he realizes that Billy is the one responsible for the accident. Claggart is about to say something impulsive, but he changes his mind and jokingly says sarcastically to Billy, "Handsomely done, my lad! And handsome is as handsome did it too!" Everyone present thinks that Claggart's comment is funny, and they laugh insincerely. Billy believes that Claggart is not actually against him, which contradicts what Dansker had previously told him.

In reality, Claggart truly harbors negative feelings towards Billy Budd, which are unexplainable and illogical. It could be because Billy's character is entirely pure and virtuous, while Claggart's seems to be inherently corrupt.

Melville quotes Plato's concept of "natural depravity" and suggests that a person who is naturally inclined towards depravity may not display obvious signs of their inner nature. In fact, they may avoid indulging in obvious vices or committing small sins, and may not exhibit any behavior that seems sordid or sensational. Instead, such a person would appear very serious, rational and logical, while harboring a strong and irrational hatred towards a particular object. Claggart can be seen as an example of this kind of person, as he fits this description.