1 (6 oz.) pkg. semi sweet chocolate morsels
2 1/4 c. sifted flour
1 tsp. baking soda
3/4 tsp. salt
1 3/4 c. sugar
3/4 c. softened butter
1 tsp. vanilla
3 eggs

Combine chocolate morsels and 1/4 cup water in saucepan; stir over low heat until chocolate is melted and smooth. Remove from heat. Sift flour, soda and salt together; set aside. Combine sugar, butter and vanilla in bowl. Beat until blended.

Add eggs, one at a time, beating well after each addition. Blend in melted chocolate mixture. Stir in flour mixture alternately with 1 cup water. Pour batter into 2 greased and floured 9 inch layer cake pans. Bake in 375 degree oven for 30 to 35 minutes. Cool.

CHOCOLATE VELVET FROSTING:

1 (6 oz.) pkg. semi sweet chocolate morsels
3 tbsp. butter
1/4 c. milk
1 tsp. vanilla
1/4 tsp. salt
3 c. sifted confectioners' sugar

Melt chocolate morsels and butter over hot, not boiling water. Remove from heat. Add milk, vanilla and salt; mix until well blended. Beat in confectioners' sugar gradually. Fill and frost cake. Garnish with chopped walnuts.