Cook potatoes until tender; peel and slice into a large bowl.
Fry bacon until crisp. Remove bacon and crumble.
Add onions and celery to bacon grease and saute for a minutes until softened.
Add cornstarch and mix well. Add sugar, vinegar and seasonings, bacon and water.
Bring to a boil and stir until thick.
Pour over potatoes. Let stand a few minutes to soak up sauce. Potato salad should be served warm.
My mom's family was English and they don't eat food as sweet, so she would cut the sugar to about 1/8 cup. the region of Germany that my great grandmother was from believed if you used a cup of vinegar you used a cup of sugar. I guess I take after the German side of my family, I like sugar and vinegar in equal amounts. Seems to balance better to me.
When taking this to potlucks, etc. I put into a crock pot and keep it on warm otherwise the bacon fat in the dressing firms up and makes the salad a bit unpleasant.