In a large saucepan over medium heat, add the bacon and cook for 7-8 minutes, or until crisp. Transfer to a paper towel-lined plate and set aside.
Pour off bacon fat, leaving only 1 tablespoon in the pan. Add onion and cook until transparent, about 5 minutes. Add garlic and cook for another 30 seconds, then stir in clam juice, water, diced potatoes, saltines, thyme and the bay leaf. Bring to a boil, then reduce heat and simmer for 20 minutes, or until the potatoes are tender. Stir occasionally.
Transfer 1 cup of cooked potatoes to a bowl and mash until smooth. Stir mashed potatoes back into soup. Reduce the heat to low and add the clams, cooking for 3-5 minutes, or until they’re cooked through.
Remove from the heat and stir in the heavy cream. Season to taste with salt and pepper. Serve with crumbled bacon to top the clam chowder.