In a covered saucepan cook potatoes in boiling salted water for 20 to 25 minutes or until potatoes are just tender; drain well. Cool slightly. Peel and slice potatoes. Set potatoes aside while preparing dressing.
For dressing, in a large skillet cook bacon until crisp. Drain bacon on paper towels, reserving 2 tablespoons drippings in skillet. Crumble bacon and set aside. Cook onion in reserved drippings until tender.
Stir in flour, sugar, salt, celery seed, and pepper. Stir in water and vinegar. Cook and stir until thickened and bubbly. Stir in potatoes, bacon, and peas. Cook for 2 to 3 minutes more or until heated through, stirring gently. Fold in basil, oregano, or parsley. Transfer to a serving bowl. Serve warm. Makes 4 servings.