Heat the oven to 375°F and grease a 9-by-13-inch baking dish with 1 tablespoon butter. Keep the sliced potatoes covered with cold water while making the sauce, then drain and pat dry.
Melt the remaining butter in a saucepan and cook onion over medium heat for 6 minutes until softened. Stir in flour for 1 minute.
Gradually whisk in milk and cream. Add salt, pepper and nutmeg and simmer for 3 minutes until lightly thickened.
Layer half the potatoes in the dish, cover with half the sauce and repeat. Cover tightly with foil and bake for 45 minutes.
Uncover and bake for 25 to 30 minutes until the surface is golden and a thin knife slides through the center without resistance. Rest for 15 minutes before serving.