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Step 1
In a large pot over medium-high heat, cook bacon until crisp and brown (stirring often). Use a slotted spoon to remove bacon; leave the drippings in the pot. You should have about ¼ cup of drippings and will need a total of ½ cup of fat in the pot. Add the butter to equal ½ cup (you will need about 4 tablespoons of butter with the drippings to total ½ cup). If you have more or less drippings from the bacon, you can adjust the amount of butter that you use accordingly.
Step 2
Melt butter in the pot with the drippings over medium heat. Add onion; cook until softened and translucent. Add flour and cook for 1 minute, stirring constantly. Drain clams, reserving the liquid in a large measuring cup. Add enough water to the clam juice to equal 2 cups. Slowly stir the liquid into the pot. Add potatoes; bring to a boil. Once the liquid boils, reduce the heat to low; cover, and simmer for about 20 minutes (or until the potatoes are tender), stirring regularly. Be sure to stir frequently and scrape the bottom of the pot to prevent scorching. The mixture will be very thick, which is good, but if it becomes too thick for you to easily stir it, you can add more water to thin it slightly.
Step 3
Once the potatoes are fork-tender, stir in clams, half-and-half and milk. Warm over low heat, being careful not to let the soup boil. Taste and season with salt and pepper, as necessary. Garnish with the cooked, chopped bacon.