There is a vacuum modulator. If the diaphragm breaks you will have this problem; also other problems because transmission fluid will be sucked into the engine. A stuck kickdown linkage can also cause this.

I agree with Mike but you might want to check your timing and also
vacuum level at the engine. I had a 72' Cougar the last year that they
were made on the Mustang platform....I had a problem like yours that
happened all of sudden, turns out that I had a vacuum leak at the EGR
Plate that sits between the carb and manfold. Seems that the exhaust
gas eats away on the neck of the plate that gos the the EGR
valve....little pin holes show up underneath that neck where you can't
see it. Don't blame the tranny yet!

HTH, Rick

Thanks for the comments but there is no EGR plate nor ports.  The intake is
an after market Edelbrock and has no EGR ports.  I have adjusted on the
vacuum modulator but it didn't make much of a difference (put little screw
driver up in the port the hose slips over).  I will check for vacuum
integrity.  It is not losing fluid as it has run like this for several
years.   The kickdown is not stuck down as there is an extra return spring
on it pulling it out (actualy, I don't think it is working as flooring it at
45mph doesn't make it kick down).

When I got the car it wouldn't go into reverse so I had tranny rebuild.  I
don't remember how it shifted before the rebuild but they did put a
different valve body on it at that time from junk yard.  I need to check
vacuum but last time I did I thought it was a bit low (16 maybe).  The cam
is a bit higher lift and duration than normal.  Would that (low vacuum)
cause this sypmtom and if so, can it be adjusted for?  Maybe my modulator is
stuck since turning screw doesn't help much.  I did have the vacuum hose pop
off of the modulator once and it wouldn't shift out of 2nd.  While I didn't
do that on purpose, I assumed that meant it was working (low vacuum means
stay in lower gear).

Again, thanks for any inputs.