As Congress contemplates what kind of bailout to give the American auto industry — or indeed, whether to give one at all — during its lame-duck session beginning today, the Chrysler Loan Guarantee Act of 1979 is sure to be on lawmakers’ minds.

In the late 1970’s, crises in the Middle East had sent fuel prices soaring, and Chrysler was sinking under the weight of a gas-guzzling fleet of models. To stave off bankruptcy, the company received $1.5 billion in loan guarantees from Congress. But as The Detroit Free Press noted this morning, the money came with lots of strings attached:

If the hard-fought Chrysler bailout of 30 years ago is any kind of template, expect shared sacrifices from all of the companies’ stakeholders and significant taxpayer protection. Chrysler, too, was dropped in a government-built fishbowl, forcing it to seek approval on all major decisions. “It was a tough piece of legislation. There were a lot of conditions, really,” former Michigan Gov. James Blanchard, who in 1979 served in Congress, said in an interview with the Free Press.

When Lee Iacocca, the chairman of Chrysler at the time, went to Congress to ask for help, he painted a picture of the situation in the auto industry that, other than the quaintly low dollar amounts, could be a description of today. Here is how Charles Hyde summed up his testimony in his 2003 history of Chrysler, Riding the Roller Coaster: A History of the Chrysler Corporation:

Lee Iacocca’s opening testimony on 18 October 1979 before the House Banking Committee, which was considering a loan guarantee bill, laid out Chrysler’s basic argument for passage. Given more breathing room, Chrysler would introduce fuel-efficient cars and return to profitability. Bankruptcy was not an option, nor was a merger with another car company. A Chrysler bankruptcy would result in the loss of more than 500,000 jobs nationally and directly affect over a million people. In the first year alone, bankruptcy would cost federal, state, and local governments $10 billion in welfare and unemployment payments, lost taxes, pension liabilities, and other costs.

The next month, the Carter administration announced its support for aid to the struggling car company, and the deal passed the House and Senate. “This legislation does not violate the principle of letting a competitive free enterprise system in our country function on its own, because Chrysler is unique in its present circumstances,” President Carter said as he put his signature to the act on Jan. 7, 1980.

The gamble seemed to pay off for the government. Chrysler settled its debt by 1983, years ahead of schedule, and the Treasury made a profit of more than $300 million on the loans. But some on the right argued that the company’s resurgence was much less of a success story for government intervention than the conventional wisdom has it.

Just how much 2008 resembles 1979 is a question lawmakers will have to consider this week.