Add enough water to dried apples to cover them. Soak for 3 hours. Place ham in large kettle that has a tight-fitting lid. Add enough water to just cover meat and simmer 1 1/2 hours. When ham is tender, add dried apples with water, in which they have been soaked. Add brown sugar and simmer for 1/2 hour or until apples are tender.

Sift together flour, baking powder, salt, and pepper. Combine egg and milk; add to dry ingredients. Pour in the melted shortening and mix just enough to dampen dry ingredients. Remove ham and schnitz to a hot platter and keep warm. Bring ham juice to a boil. Drop batter from a tablespoon into boiling liquid. Cover tightly and cook 18 to 20 minutes. Surround ham and schnitz with knepp. Pour remaining liquid over ham. Serve hot.

If desired, change water once after 30 minutes of simmering.