Bassanio: Why dost thou whet thy knife so earnestly?
Shylock: To cut the forfeiture from that bankrupt there.
I just thought it was pretty theatrical that Shylock has a knife, in a courtroom, and he's sharpening it. Also, the only thing he was question of was why he was sharpening it. There was no shock that he pulled a knife out in the least, they just needed justification not of its presence, but of its sharpening. To much surprise, we see that Shylock is truly seeking revenge and not the money, as repeated throughout the scene.