Thermosetting varnishes based on oil-modified phenolic resins appear to have certain advantages over the conventional oil varnishes for the treatment of coils which operate under oil. These anticipated advantages are associated with their heat-hardening characteristics and the absence of metallic driers. Oxidizing oil varnishes dry and harden by oxidation; hence, when applied as a thin film they will harden satisfactorily. However, if they are applied thickly only the surface hardens, and the varnish underneath remains fluid indefinitely. These varnishes also contain ingredients which may adversely affect the insulating oil. Laboratory tests were therefore made to compare the behavior in oil of small coils (a) untreated, (b) treated with thermosetting varnishes and (c) treated with conventional oil varnishes. The criterion adopted in these comparisons was the ultimate effect of the specimen coil on the sludging and general properties of the mineral oil in which it had been immersed. Other factors likely to influence the effect of the coils, such as the conductor, conductor covering, the presence of air and susceptibility of the oil to deterioration, were also taken into consideration. The tests were made at temperatures between 75° and 80° C and the normal period of heating was about 10 weeks.