Cake: Combine in saucepan semisweet chocolate chips and the 1/4 cup water
and stir over low heat until melted and smooth. Remove from heat.
Sift together flour, baking soda and salt; set aside.
Combine in bowl, sugar, butter and vanilla extract and beat until well blended.
Add eggs, one at a time, beating well after each addition. Blend in melted chocolate
mixture. Stir in flour mixture alternately with the 1 cup water. Pour into two
greased and floured 9-inch layer cake pans.
Bake at 375 degrees F for 30-35 minutes.
Fill and frost.
Chocolate Velvet Frosting: Melt semisweet chocolate chips and butter over
hot (not boiling) water. Remove from water. Add milk, vanilla extract and salt;
mix until well blended. Gradually beat in confectioners' sugar.