Scalloped Potatoes

1/4 cup chopped onion 1/4 cup butter or margarine
1/4 cup all-purpose flour 2 1/2 cups milk
1 1/2 tsp salt 1/8 tsp pepper
5 large potatoes, peeled and thinly sliced (5 cups)
To make sauce, cook onion in butter or margarine till tender but not brown. Stir in flour, salt, and pepper. Add milk. Cook and stir till thickened and bubbly. Cook and stir 1 to 2 minutes more. Remove from heat. Place half of the sliced potatoes in a greased 2-quart casserole dish. Cover with half of the sauce. Repeat layers. Bake, covered, in a 350ºF oven for 45 minutes, stirring once. Uncover, bake about 30 minutes more or until potatoes are done.