diff --git a/Tests/Succeed/Test194.ML b/Tests/Succeed/Test194.ML
new file mode 100644
index 00000000..73e85155
--- /dev/null
+++ b/Tests/Succeed/Test194.ML
@@ -0,0 +1,42 @@
+(* Phil Clayton's example in issue 138.  This caused exponential blow-up because of inlining. *)
+
+fun C f =
+  fn
+    SOME n => f n
+  | NONE   => f 0
+
+infixr 1 &&&>
+fun (f &&&> g) h (a, b) = f (fn a' => g (fn b' => h (a', b')) b) a;
+
+fun test f =
+  (
+    C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+     &&&> C
+  )
+    f
+;