Melt butter in saucepan. Blend in flour.
Add milk, salt, and pepper.
Cook slowly over medium heat, stirring constantly, until hot.
Add chopped onion and grated cheese. Continue stirring until thick.
POTATOES
Grease 8" square casserole dish.
Layer potatoes with sauce in casserole.
Bake at 350°F covered for about 45 minutes. Continue baking uncovered 30-40 minutes longer.
Double for 9"x13" casserole