Cook potatoes in water with salt for about 35 minutes. Do not peel.
In a small skillet fry bacon until crisp, add onion, saute until tender. Add cornstarch, stir. Pull off heat. Mix sugar, salt and pepper, vinegar and water until smooth. Add to bacon and onions. Then simmer, stirring until slightly thick.
Pour hot dressing over potatoes.
Aunt Lina, the authentic German, inspired Mitzi to copy the recipe. She would serve the German Potato salad all of the time.