Directions

1. In a large saucepan over medium-low heat, heat milk until bubbles just begin to form at edges. Remove from heat and stir in 1/2 cup sugar, 1/2 cup butter and salt. Stir until sugar dissolves. Let stand until butter melts entirely.
2. Preheat oven to 350 degrees F (175 degrees C). Butter a 4 quart casserole and dust generously with nutmeg.
3. Tear bread apart, 2 slices at a time, into 2 inch pieces and stir into milk mixture. Gently stir beaten eggs into milk mixture. Pour into prepared pan and sprinkle the surface with nutmeg.
4. Line a roasting pan with a damp kitchen towel. Place baking dish on towel, inside roasting pan, and place roasting pan on oven rack. Fill roasting pan with boiling water to reach halfway up the sides of the baking dish. Bake 45 minutes, until center is almost set. Serve warm with hard sauce.
5. Hard sauce: In a small saucepan over medium heat, combine water, 1/2 cup sugar, cornstarch, 1/4 cup butter and 1 tablespoon nutmeg. Bring to a rolling boil, remove from heat and set aside until serving.