The narrator describes one of the petty officers of the Indomitable, named John Claggart, who was the master-at-arms. This position was originally for the purpose of instructing those onboard in the use of swords and other weapons. But now that the use of gunpowder is widespread, Claggart's real duty is to keep order on the gun-decks.
Modern combat doesn't involve swords, so the master-at-arms is a somewhat anachronistic position on the ship, another example of the contrast between the present and the (more noble) past.
Claggart was 35 years old, tall, and reminiscent of figures from ancient Greek coins—except for his protruding chin. The narrator notes that his brow suggested above-average intelligence and he had dark hair and light skin, in contrast to other bronzed sailors. He looked like a man of high moral quality and, although he seemed to be an Englishman, he had the hint of a possible foreign accent.
Claggart's origins are uncertain, which prompts the narrator to describe some of the ways the navy obtained sailors. The navy was so desperate for men that London police were known to take questionable characters and send them into naval service. Insolvent debtors would also take to sea to escape their obligations on land. The narrator has even heard that some ships would fill their quota of sailors by drafting men from the jails, though the narrator cannot confirm whether this is true.
The navy is so desperate for sailors that it takes onboard various questionable individuals who are in such dire straights that they are willing (or obligated) to give up their individual rights as civilians. The narrator is upfront about his inability to confirm the truth of the rumor about some sailors coming from the jails.
There are rumors that Claggart came to the navy through one of these disreputable means, but the narrator assures the reader that such rumors are not to be trusted. They come from lower crewmembers who may have grudges against their superior. In any case, Claggart quickly rose through the ranks in the navy to become master-at-arms.
The narrator dismisses the rumors about Claggart, but how can we know that the narrator's own opinion is the truth and not itself another rumor? After all, the narrator seems to believe strongly in outside appearance revealing inner virtue, yet in Claggart this belief is proved wrong. The narrator does not seem entirely reliable—not in the sense that the narrator is making things up, but rather that the narrator may have an oversimplified view of things.