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The overdrive governor is actually a grounding switch. When the vehicle reaches a speed slightly over 20 MPH centrifugal force closes a set of contacts in the governor this grounds the Overdrive relay which engages the solenoid mounted on the left rear side of the transmission overdrive unit. Note. this circuit is active any time your ignition is on. The "lockout" handle only disables the mechanical function of the Overdrive
The governor can be bench checked by spinning the shaft/gear and checking the circuit with an ohm meter. First insure the gear and shaft rotate without a lot of resistance. Spin the gear and shaft by hand there will be some resistance. If resistance is excessive remove the top cover and flush the internal works with brake cleaner or other type of cleaner that evaporates rapidly. Then flush with WD40,let the WD40 drain thoroughly then recheck for excessive resistance. It should spin fairly easy but not freely.
Connect one lead of the ohm meter to the governor wire and the other lead to the governor case. Spin the gear and shaft up to speed using a bench grinder wire wheel to rotate the gear and shaft. (Always use safety glasses for this procedure) Once the shaft reaches the correct speed centrifugal force will close the contacts inside the governor and the ohm meter will show the circuit is operating properly.
Left Photo Overdrive Governor
Right Photo Test in progress, using Ohm Meter and wire wheel
Lower Photo Test setup, using Ohm Meter and wire wheel