Wash and peel potatoes. If you prefer more color in your salad don’t peel the potatoes.
Bring a pot of salted water to a boil. Add potatoes. Cover tightly and return to boiling, reduce heat and cook for 20 to 25 minutes or until tender. Drain and set aside.
In a large skillet fry bacon until crisp, remove and drain. Cook and stir onion in bacon drippings until tender and golden brown. Stir in flour, sugar, celery seed or dill weed, salt, and pepper. Cook over low head, stirring until bubbly.
Remove from heat, add water and vinegar. Return to heat, bring to a boil, stirring constantly. Boil and stir for one minute.
Thinly slice potatoes, and crumble bacon over them. Pour sauce over potatoes, toss to coat. Serve warm