Simmer bacon, onion, butter and water in frying pan. Don’t let bacon brown. Drain off all liquid except 1 Tbsp.
In large pot, combine bacon mixture with 1 Tbsp bacon juice – add the potatoes. Add the juice from the clams (not the clams). Add enough water to cover the potatoes.
When potatoes are tender, add 4 cups milk and pepper to taste. Heat, but don’t boil.
When hot, add clams – still do not boil! Just heat to serve.