Cook the onion in hot oil until it is tender (but not brown).
Stir in the crushed tomatoes, tomato sauce, tomato paste, sugar, salt, pepper, oregano and bay leaves.
Simmer for 30 minutes. As the sauce simmers keep an eye on it, if it looks too thick add some water up to one cup.
While the sauce is simmering mix together the meatballs.
To dry the bread, preheat your oven to it’s lowest setting (170 degrees) and when it gets to that temperature, turn it off and place the bread slices in and let the low heat dry them.
Remove bread from the oven and place in a mixing bowl.
Preheat the oven to 375 degrees and line a cookie sheet with sides with foil.Soak the dried bread in water for 2-3 minutes, then squeeze out the moisture.
Combine the bread with the rest of the ingredients, mixing well with your hands.Form into small balls (approximately 20).
Bake for 15 minutes or until they are cooked through.
Remove from the pan and add to the simmering sauce.
Cook for 30 minutes longer.Serve over hot spaghetti.