SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D. C.  20459

                                   FORM   10-Q

              QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
                            SECURITIES EXCHANGE ACT OF 1934


 For Quarter Ended    September 30, 1996    Commission File Number  I-4383  


                     ESPEY MFG. & ELECTRONICS CORP.                         
        (Exact name of registrant as specified in charter)                     
                                                          

          NEW YORK                                14-1387171                
       (State of Incorporation)                    (I.R.S. Employer's Ident No.)


         P. O. Box 422,  Saratoga Springs,  New York            12866           
         (Address of principal executive offices)             (Zip Code)



       Registrant's telephone number, include area code     518-584-4100    




       Number of shares outstanding of issuer's class of common stock
       $.33-1/3 par value as at the end of the period covered by this
       report    1,111,220    .




     Indicate by check mark whether the registrant (1) has filed all reports
     required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
     of 1934 during the preceding 12 months (or for such shorter period that the
     registrant was required to file such reports), and (2) has been subject to
     such filing requirements for the past 90 days.


                     YES    X                                 NO          

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                              ESPEY MFG. & ELECTRONICS CORP.

                                       I N D E X





PART I        FINANCIAL INFORMATION                                         PAGE


              Item 1        Financial Statments:


                            Balance Sheets - September 30, 1996                1
                            and June 30, 1996                                  


                            Statements of Earnings - Three Months              3
                            Ended September 30, 1996 and 1996
                                                               

                            Statements of Cash Flows - Three Months            4
                            September 30, 1996 and 1995              


                            Notes to Financial Statements                      5
                            September 30, 1996 and 1995                    


              Item 2        Management's Discussion and Analysis of            7
                            Financial Condition and Results of              
                            Operations.                                        



PART II       OTHER INFORMATION                                                9

              SIGNATURES                                                      10
       
                                                                              









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<CAPTION>





                                   ESPEY MFG. & ELECTRONICS CORP.

                                            Balance Sheets

                             September 30, 1996 and June 30, 1996

                                             A S S E T S

                                                                Unaudited                               
                                                                  1996                  1996
                                                               September 30           June 30
CURRENT ASSETS:
<S>                                                           <C>                  <C>         
       Cash and cash equivelents                              $     219,920        $   1,112,767
       Short-term investments at cost                         
          (market value September 30, 1996,                                    
            $6,969,532 and June 30, 1996,                                          
              $4,577,305)                                         6,904,263            4,484,312  
                     Total Cash and Short-term
                            Investments                           7,124,183            5,597,079

       Marketable investment securities - current                 1,073,403            3,021,195

       Trade accounts receivable net of                                    
          $3,000 allowance September 30, 1996
          and June 30, 1996                                       3,826,767            1,556,404        
       Other receivables                                                500               18,177

                     Net Receivables                              3,827,267            1,574,581
              
       Inventories:

          Raw materials and supplies                                511,520              499,900
          Work-in-process                                         2,823,110            1,561,742
          Costs relating to contracts in
          process                                                 6,319,662            8,971,704

                     Net Inventories                              9,654,292           11,033,346
                                                                                     
       Deferred income taxes                                            796                  796
       Prepaid expenses and other current assets                    172,150              272,808

                     Total Current Assets                        21,852,091           21,499,805

Deferred income taxes                                                43,920                9,088

PROPERTY, PLANT AND EQUIPMENT AT COST                            11,923,814           11,813,137 

       Less: Accumulated depreciation and
             amortization                                        (8,538,999)          (8,371,987)

              Net Property, Plant and Equipment                   3,384,815            3,441,150

                     Total                                    $  25,280,826        $  24,950,043
                                                                                                

              
                                             - 1 -                                 (Continued)          
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<CAPTION>
                                   ESPEY MFG. & ELECTRONICS CORP.

                                     Balance Sheets, Continued

                          September 30, 1996 and June 30, 1996 

                              LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                 Unaudited
                                                                     1996              1996
                                                               September 30           June 30
CURRENT LIABILITIES:
<S>                                                           <C>                  <C>         
       Accounts Payable                                       $    133,150         $    158,631
       Accrued expenses:
          Salaries, wages and commissions                          168,884              116,351
          Employees' insurance costs                                48,310               54,739
          ESOP payable                                             110,249                 -
          Other                                                     11,397               17,440
          Payroll and other taxes withheld                                  
              and accrued                                           70,985              156,890
          Dividends payable                                        777,854                  -    
          Income taxes payable                                     252,297              119,857
       
                     TOTAL CURRENT LIABILITIES                   1,573,126              623,908
       
       

STOCKHOLDERS' EQUITY:

       Common stock, par value .33-1/3 per
       share.  Authorized 2,250,000 shares;
       issued 1,514,937 shares September 30, 1996
       and June 30, 1996.                                          504,979              504,979

       Capital in excess of par value                           10,496,287           10,496,287

       Retained earnings                                        23,813,997           24,316,400
                                                                34,815,263           35,317,666

       Less:  Common stock subscribed                          ( 4,469,299)         ( 4,469,299)
               Cost of 403,717 shares on September
               30, 1996 and 396,291 shares on
               June 30, 1996 of common stock in
               treasury                                        ( 6,638,264)         ( 6,522,232)

              TOTAL STOCKHOLDERS' EQUITY                        23,707,700           24,326,135

                            TOTAL                             $ 25,280,826         $ 24,950,043
                                                                                               


<FN>
       See accompanying notes to financial statements
</FN>

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<CAPTION>                                                               
                        
                                   ESPEY MFG. & ELECTRONICS CORP.

                                      Statements of Earnings

                      Three Months Ended September 30, 1996 and 1995
                                                                 


                                                                              Unaudited   
                                                                             Three Months
                                                                September 1996            September 1995
<S>                                                             <C>                       <C>         
Net Sales                                                       $    4,586,892            $   4,000,805

Cost of sales                                                       3,888,874                 3,596,130

                            GROSS PROFIT                               698,018                  404,675

Selling, general and administrative
       expenses                                                       447,335                   411,535

                            OPERATING INCOME (LOSS)                   250,683             (       6,860)

Other Income:

       Interest income                                                 124,661                   159,462
       Sundry income                                                      375                     6,838 

                                                                       125,036                   166,300
                                                                                                       

Earnings before income taxes                                           375,719                  159,440  

Provision for income taxes                                            147,000                    61,000


                            NET EARNINGS                      $       228,719             $      98,440
                                                                                                       



Earnings per Share:

Net earnings                                                            $ .21                     $ .07
                                                                                                      

Average number of shares outstanding                                1,114,610                 1,341,350
                                                                                                      


<FN>
    See accompanying notes to financial statements
</FN>      



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<CAPTION>
                                                                            
                                   ESPEY MFG. & ELECTRONICS CORP.
                                     Statements of Cash Flows
                         Three Months Ended September 30, 1995 and 1994
                                                                                Unaudited
                                                                               September 30        
                                                                         1995                 1994     
Cash Flows From Operating Activities:
<S>                                                                  <C>                  <C> 
       Net earnings                                                  $      98,440        $    174,765

Adjustments to reconcile net earnings to net
cash provided by operating activities:

       Tax effect of dividends on unallocated ESOP shares                   45,063              50,070  
       Depreciation                                                        104,919             102,073
       Changes in assets and liabilities:
              Decrease (increase) in receivables, net                (      82,162)       (  1,301,772) 
              Decrease (increase) in inventories, net                (     923,873)            761,620  
              Decrease (increase) in other current assets                  275,488              94,432   
              Decrease (increase) in income tax refund receivable           31,920             143,691 
              Increase (decrease) in accounts payable                      302,067             229,842
              Increase (decrease) in accrued salaries,                      66,717              67,353  
                     wages and commissions
              Increase (decrease) in accrued employee                (       2,673)       (     14,096)  
                     insurance costs                                                               
              Increase (decrease) in other accrued expenses          (       1,235)       (      3,390)
              Increase (decrease) in payroll & other                 (      67,849)       (     68,926) 
                     taxes withheld and accrued
              Decrease in deferred income taxes                      (      15,983)       (     20,761)  
              Increase (decrease) in accrued ESOP contributions            106,572             108,148

                                   Net cash provided by (used by)    
                                   operating activities              (      62,589)            323,049

Cash Flows From Investing Activities:

       Additions to property, plant & equipment                      (      21,881)       (    341,819)
       Proceeds from sale of marketable investment securities              971,174                -      
       Purchases of marketable investment securities                 (   1,891,913)               -      
 
                     
                                   Net cash provided by (used in) 
                                   investing activities              (     942,620)       (    341,819)

Cash Flows From Financing Activities:

       Purchase of treasury stock                                    (      67,075)       (     31,837)

                                   Net cash used in
                                   financing activities              (      67,075)       (     31,837)

Increase (decrease) in cash and short-term investments               (   1,072,284)       (     50,607)


Cash and short-term investments, beginning of period                     1,699,215          13,469,584

Cash and short-term investments, end of period                       $     626,931        $ 13,418,977 
                                                                                                      


Income Taxes Paid                                                    $      -             $       -   
<FN>                                                                                                      
See accompanying notes to financial statements. 
</FN>
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                            ESPEY MFG. & ELECTRONICS CORP.

                            Notes to Financial Statements
                                ___________________

1. In the opinion of management, the accompanying unaudited
    financial statements contain all adjustments (consisting of only
    normal recurring accruals) necessary to present fairly the
    financial position of the Company as of September 30, 1996, and
    the results of operations for each of the three months ended
    September 30, 1996 and 1995 and cash flows for each of the three
    months ended September 30, 1996 and 1995.

2. The earnings per share computations for September 30, 1996 were
    based on 1,114,610 shares and on 1,341,350 shares for September
    30, 1995.  These represent the average number of shares
    outstanding for each respective period.

3. Other income consists principally of interest on Certificates of
    Deposit, Treasury Bills and money market accounts.
 
4. There were no material unusual charges or credits to operations
    or a change in accountants during the most recently completed
    quarter which would require the filing of a Form 8-K. 

5. There were no securities sold by the Company during the current
    quarter which were not registered under the Securities Act of
    1934 in reliance upon an exemption from registration provided in
    Section 4 (2) of the Act.

6. For purposes of the statements of cash flows, the Company
    considers all liquid debt instruments with original maturities
    of three months or less to be cash equivalents. 

7. In fiscal 1989 the Company established an Employee Stock
    Ownership Plan (ESOP) for eligible non-union employees.  The ESOP
    used the proceeds of a loan from the Company to purchase 316,224
    shares of the Company's common stock for approximately $8.4
    million and the Company contributed approximately $400,000 to the
    ESOP which was used by the ESOP to purchase an additional 15,000
    shares of the Company's common stock.




                                   - 5 -
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    The loan from the Company to the ESOP is repayable in annual
    installments of $1,039,605, including interest, through June 30,
    2004. Interest is payable at a rate of 9% per annum.  The
    Company's receivable from the ESOP is recorded as common stock
    subscribed in the accompanying balance sheets.

    Each year, the Company will make contributions to the ESOP which
    will be used to make loan interest and principal payments. With
    each loan and interest payment, a portion of the common stock
    will be allocated to participating employees.  As of September
    30, 1996 there were 132,571 shares allocated to participants.  

8. The Company adopted the provisions of SFAS No. 121, "Accounting
    for the Impairment of Long-Lived Assets and for Long-Lived Assets
    to Be Disposed Of", as of July 1, 1995.  This accounting standard
    required that certain long-lived assets be reviewed for
    impairment when events or circumstances indicate that the
    carrying amount of the assets may not be recoverable.  If such
    review indicates that the carrying value is written down to fair
    value.  Long-lived assets to be disposed of are reported at the
    lower of carrying amount or fair value less cost to sell.  The
    adoption of this accounting standard had no effect on the
    financial position or results of operations of the Company.




















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                  ESPEY MFG. & ELECTRONICS CORP.

            Management's Discussion and Analysis of

         Financial Condition and Results of Operations
                                                              

 
Sales for the three months ended September 30, 1996 were
$4,586,892 as compared to $4,000,805 for the same period
in 1995. Sales volume is largely dependent on both lead
times required for new orders and the specific delivery
needs of our customers.

Net earnings for the three month period were $228,719 or
$.21 per share compared to $98,440 or $.07 per share for
the corresponding period of last year.

Many of the contracts shipped in the current quarter
carried a somewhat higher gross profit margin than those
shipped during the corresponding quarter of last year. As
a result, cost of sales dropped to 85% compared to the
90% reflected last year. This factor, together with the
increase in sales, are the primary reasons for the
increase in net profits. In an effort to continue this
positive trend we have enhanced and expanded our Sales
and Marketing departments. Various specifics concerning
the products we are concentrating on are addressed in
both the President's message acompanying our 1996 Annual
Report and in our most recently filed Form 10K.
Management has confidence that the Company can accomplish
its goals.  

Selling and G & A expenses show an increase of
approximately 9% during the current period. This is
principally due to the reclassification of certain
salaries from manufacturing expenses to general and
administrative expenses. 

In the Statements of Cash Flows the decrease in
inventories is in line with the increase in Sales. The
increase in Accounts Receivable is due to a large volume
of shipments made toward the end of the quarter. Most of
these receivables have already been paid, and the Company
feels that its reserve is adequate.

Investment income declined by approximately 22% for the
current three month period primarily due to a reduction
in our investment base brought about by a major
repurchase of our common stock during the latter part of
our last fiscal year. The Company does not feel that
there is any risk associated with its investment policy,
since the majority of our investments are represented by
U.S. Government securities, Certificates of Deposit and
money market accounts.

Since the debt of the Company's ESOP is not to an outside
party, we have eliminated from the Statements of Earnings
the offsetting items of interest income and interest
expense relating to the ESOP. We have also eliminated the
offsetting accruals from the Balance Sheets.



                                     -7-

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The Company, when possible, funds all of its operations
including Financing Activities and Investing Activities
with cash flows resulting from Operating Activities. It
is currently felt that during the next fiscal year, funds
from Operating Activities will continue to be adequate to
meet these needs. For the current three month period
capital expenditures were approximately $110,677.

During the three month period ended September 30, 1996
the Company repurchased 7,426 shares of its common stock.

Under existing authorizations, as of September 30, 1996,
funds in the amount of $1,883,969 were available for the
continuing repurchase of the Company's shares.

The backlog as of September 30, 1995 was $18,319,247. The
backlog as of September 30, 1996 was $12,218,320.
Although customer order patterns are inherently difficult
to predict, the Company believes that it will continue to
obtain contracts consistent with our past experience. We
are currently anticipating a new contract for our high
power radar transmitters, which, if received, along with
our other anticipated new business will result in
substantially increasing our backlog.  

A dividend in the amount of $.70 per share was declared
payable November 22, 1996 to shareholders of record on
October 28, 1996. 

                                      



























                                     -8-

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                            ESPEY MFG. & ELECTRONICS CORP.

                     PART II:  Other Information and Signatures



Item 4.       Submission of Matters to a Vote of Security Holders

              None during the quarter.            


Item 5.       Other Information           

              On August 1, 1996 Mr. Joseph Canterino assumed the duties
              of President and Chief Executive Officer of the Company
              in accordance with the Form 8-K described below.


Item 6.       Exhibits and Reports on Form 8-K

              On July 15, 1996 a Form 8-K was filed with an attached
              press release dated July 10, 1996 indicating that Mr. Sol
              Pinsley would retire as President and Chief Executive
              Officer but pursuant to his employment contract would
              remain as Chairman of the Board and a non-executive               
              officer employee of the Corporation at a reduced
              compensation level.  Mr. Joseph Canterino, Vice-President
              of Manufacturing, would assume the duties of President
              and Chief Executive Officer. 





















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                            S I G N A T U R E S



Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.




                                          ESPEY MFG. & ELECTRONICS CORP.




                                                                         
                                          Joseph Canterino, President



                                                                         
                                          Herbert Potoker, Treasurer and
                                          Chief Financial Officer



               
 13 November 1996     
        Date 



















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