Heat oven to 350ºF. Grease bottom and side of 2-quart casserole.
Scrub potatoes; peel if desired. Cut into 1/8-inch slices to measure about 4 cups.
Melt 3 tablespoons butter in 2-quart saucepan over medium heat. Cook onion in butter about 2 minutes, stirring occasionally, until tender. Stir in flour, salt and pepper. Cook, stirring constantly, until smooth and bubbly; remove from heat.
Stir in milk. Heat to boiling, stirring constantly. Boil and stir 1 minute.
Spread potatoes in casserole. Pour sauce over potatoes. Dot with 1 tablespoon butter.
Cover and bake 30 minutes. Uncover and bake 1 hour to 1 hour 10 minutes longer or until potatoes are tender. Let stand 5 to 10 minutes before serving.