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  December 31, 1997   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.)


	  233 Ballston Avenue,  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          

  






		  	 	  ESPEY MFG. & ELECTRONICS CORP.

                                          I N D E X





PART I	FINANCIAL INFORMATION						PAGE


		Item 1	Financial Statements:


				Balance Sheets - December 31, 1997    	   1
				and June 30, 1997  					  


                                Statements of Earnings - Three and         3
				Six Months ended December 31, 1997
                                and 1996
					                            

                                Statements of Cash Flows - Six Months      4
				Ended December 31, 1997 and 1996              


                                Notes to Financial Statements              5


              Item 2   Management's Discussion and Analysis of             8
                       Financial Condition and Results of Operations.     



PART II OTHER INFORMATION                                                 11 

        SIGNATURES                                                        12
	
												  



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       			ESPEY MFG. & ELECTRONICS CORP.

                               Balance Sheets

                      December 31, 1997 and June 30, 1997

                                 A S S E T S

                                                          Unaudited
                                                            1997                          1997
                                                         December 31                     June 30      
CURRENT ASSETS:
<S>                                                     <C>                        <C>
        Cash                                             $     467,924              $   1,416,801
	Short-term investments at cost			
	   (market value December 31, 1997,				   
	     $9,865,600 and June 30, 1997,						
                $10,746,731)                                 9,831,022                 10,706,782
                        Total Cash and Short-term
                                Investments                 10,298,946                 12,123,583

	
	Trade accounts receivable net of			     	      
           $3,000 allowance December 31, 1997
           and June 30, 1997                                 2,582,332                  1,142,599
        Other receivables                                          500                     21,231

                        Net Receivables                      2,582,832                  1,163,830
		
	Inventories:

           Raw materials and supplies                          542,927                    449,416
           Work-in-process                                   3,469,379                  3,225,657
	   Costs relating to contracts in
           process                                           4,227,810                  4,526,802

                        Net Inventories                      8,240,116                  8,201,875
                                                                              
        Deferred income taxes                                  140,727                    137,758
        Prepaid expenses and other current assets              430,926                    192,853

                                   Total Current Assets     21,693,547                 21,819,899

DEFERRED INCOME TAXES                                           78,313                     74,671

PROPERTY, PLANT AND EQUIPMENT AT COST                       12,142,706                 12,043,850 

	Less: Accumulated depreciation and
              amortization                                  (8,948,509)                (8,738,469)

                Net Property, Plant and Equipment            3,194,197                  3,305,381

                                Total                    $  24,966,057              $  25,199,951
									             	             

		
                                                                                        (Continued) 
	  	
                                        - 1 -

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                ESPEY MFG. & ELECTRONICS CORP.

                  Balance Sheets, Continued

              December 31, 1997 and June 30, 1997 

              LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                  Unaudited
                                                                    1997                       1997
                                                                 December 31                  June 30  
CURRENT LIABILITIES:
<S>                                                             <C>                       <C>
        Accounts Payable                                        $    465,662               $    245,803
	Accrued expenses:
           Salaries, wages and commissions                           215,624                    107,640
           Employees' insurance costs                                 37,817                     40,573
           ESOP payable                                              227,852                       -
           Other                                                      13,523                      8,994
	   Payroll and other taxes withheld                  	
                and accrued                                           73,613                     47,564
           Dividends payable                                            -                           -  
           Income taxes payable                                         -                       148,606
	 
                        TOTAL CURRENT LIABILITIES                  1,034,091                    599,180
	
	

STOCKHOLDERS' EQUITY:

	Common stock, par value .33-1/3 per
	share.  Authorized 2,250,000 shares;
	issued 1,514,937 shares December 31, 1997
        and June 30, 1997.                                           504,979                     504,979

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

        Retained earnings                                         23,479,600                  24,148,405
                                                                  34,480,866                  35,149,671

        Less:  Common stock subscribed                           ( 3,910,636)                ( 3,910,636)
	       Cost of 403,717 shares on December
	       31, 1997 and June 30, 1997 of common
               stock in treasury                                 ( 6,638,264)                ( 6,638,264)

        TOTAL STOCKHOLDERS' EQUITY                                23,931,966                  24,600,771

                                        TOTAL                   $ 24,966,057                $ 25,199,951
								                                               	                    

<FN>

	See accompanying notes to financial statements

</FN>


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                              ESPEY MFG. & ELECTRONICS CORP.

                                STATEMENTS OF EARNINGS

                 Three and Six Months Ended December 31, 1997 and 1996
                                             
                                 Unaudited                    Unaudited
                                 Three Months                 Six Months
                                   1997           1996          1997          1996   
<S>                             <C>          <C>            <C>          <C>
Net Sales                        $  3,549,697 $  4,066,386   $  6,053,281 $  8,653,278

Cost of sales                       3,148,398    3,337,165      5,223,379    7,226,039

                Gross profit          401,300      729,221        829,902    1,427,239

Selling, general and administrative
 Expenses                             500,660      459,543      1,007,825      906,878
        Operating income (loss)  (     99,360)     269,678   (    177,923)     520,361

Other income
        Interest income               140,933      123,862        290,298      248,523
        Sundry income                     382        2,586          1,589        2,961
                                      141,315      126,448        291,887      251,484

Earnings before income taxes           41,955      396,126        113,964      771,845
  
Provision for income taxes             17,000      152,000         44,000      299,000


                Net earnings     $     24,955 $    244,126   $     69,964 $    472,845
							            		            		            		            
Earnings per share:


Net earnings                          $ .02         $ .21         $ .06        $ .42
                                                                          

Average number of shares
       outstanding                  1,111,220     1,111,220     1,111,220    1,112,915
                                                                          

<FN>

See accompanying notes to Financial Statements

</FN> 
                                                               - 3 -                                                            

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                                        ESPEY MFG. & ELECTRONICS CORP.
                                           Statements of Cash Flows
                                  Six Months Ended December 31, 1997 and 1996


                                                                            Unaudited
                                                                           December 31               
                                                                     1997               1996    
<S>                                                            <C>                <C>
Cash Flows From Operating Activities:

Net earnings                                                    $      69,964      $   472,845

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

        Tax effect of dividends on unallocated ESOP shares             39,084           46,732
        Depreciation                                                  210,040          293,635
	Changes in assets and liabilities:
                Decrease (increase) in receivables, net         (   1,419,002)         365,772
                Decrease (increase) in inventories, net         (      38,241)       2,130,627
		Decrease (increase) in  prepaid and
                         other current assets                   (     238,073)     (    88,986)
        Increase (decrease) in accounts payable                       219,859          303,401
                Increase (decrease) in accrued salaries,              107,984          106,335
			 wages and commissions
                Increase (decrease) in accrued employee         (       2,756)     (    15,879)
			 insurance costs                                                          
                Increase (decrease) in other accrued expenses           4,530              856
        Increase (decrease) in payroll & other                         26,049      (   118,547)
 			taxes withheld and accrued
                Increase (decrease) in income tax payable       (     148,606)          62,218
                Decrease (increase) in deferred income taxes    (       6,611)     (    54,110)
                Increase (decrease) in accrued ESOP contributions     227,852          220,498

                            Net cash provided by(used in)
                            operating activities                (     947,927)       3,725,397

Cash Flows From Investing Activities:

        Additions to property, plant & equipment                (      98,856)     (   167,747)
 	Proceeds from maturity of marketable investment 
	 securities	                                							       -	 	       3,894,598 
        Purchases of marketable investment securities                    -         ( 1,958,878)

                            Net cash provided by (used in)
                            investing activities                (      98,856)       1,767,973

Cash Flows From Financing Activities:

        Dividends on common stock                               (     777,854)     (   777,854)
        Purchase of treasury stock                                      -          (   116,032)

                            Net cash used in
                            financing activities                (     777,854)     (   893,886)

Increase (decrease) in cash and short-term
   investments                                                  (   1,824,637)       4,599,484


Cash and short-term investments,
   beginning of period                                             12,123,583        5,597,079

Cash and short-term investments, end of period                 $   10,298,946     $ 10,196,563 
										             	                   


Income Taxes Paid                                              $      195,000     $    241,500


<FN>										             		            
See accompanying notes to financial statements. 

</FN>


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                              ESPEY MFG. & ELECTRONICS CORP.

                              Notes to Financial Statements
                                   ___________________


1. The unaudited interim financial statements have been prepared
   pursuant to the rules and regulations of the Securities and
   Exchange Commission.  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 December 31, 1997, and the results of operations
   for each of the three and six month periods ended December
   31,1997 and 1996 and cash flows for each of the six month period
   ended December 31, 1997 and 1996.  The operating results for the
   three month and six month periods are not necessarily indicative
   of the operating results to be expected for the full fiscal
   year. Certain information and footnote disclosures normally
   included in financial statements prepared in accordance with
   generally accepted accounting principals have been condensed or
   omitted pursuant to such rules and regulations applicable to
   interim financial statements, although management believes the
   disclosures are adequate to make the information presented not
   misleading.  These financial statements should be read in
   conjunction with the Company's most recent audited financial
   statements included in its 1997 Annual Report to Stockholders
   and its 1997 Form 10-K.
  
2. The earnings per share computations for December 31, 1997 were based
   on 1,111,220 shares and on 1,112,915 shares for December 31,1996. These
   represent the average number of shares outstanding for each respective
   period. Pursuant to the Company's STOCK RIGHTS PLAN
  (as described in the 1997 Form 10- K),common stock purchase rights
   under the Plan could potentially dilute earnings per common share in
   the future. These shares were not included in a computation of diluted
   earnings per share because to do so would have been anti-dilutive for
   the periods presented.

                                        - 5 -

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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.


   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 December 31, 1997 there were 145,372 shares allocated to
   participants.  



                 - 6 -

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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.








       		      	        	- 7 -						

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ESPEY MFG. & ELECTRONICS CORP.
Management's Discussion and Analysis of
Financial Condition and Results of Operation
Results of  Operations

Sales for the six months ended December 31, 1997 were $6,053,281
as compared to $8,653,278 for the same period in 1996. The Company's
sales volume continues to be effected by the  consolidation and
relocation of the facilities and personnel of one of the Company's
major customers. 

The cost of sales, as a percentage of sales,  rose marginally  to 86%
for the first half of fiscal 1998 as compared to the 84% reflected
for the same period last year. Although the gross profit margins
remained about the same, net earnings, and net earnings per share,
were adversely  effected by the decrease in sales volume.    

The 17% increase in interest income, between the first half of fiscal
1998 and the corresponding period of fiscal 1997, was directly related
to the net increase in cash and short-term investments available during
the course of the current period for the generating of interest income.
There was also a slight increase in the short term interest rates
available to the Company. The reclassification of short-term investments
was explained in detail in the most  recently filed Form 10-K in Item 7,
"Management's Discussion and Analysis of Financial Condition and Results
of Operations - Liquidity and Capital Expenditures."  The Company does not
feel that there is any risk associated with its investment policy, since
the majority of our investments are represented by Certificates of
Deposit, United States Government Treasury Securities and a Money Market
account.

Net earnings for the six month period  ended December 31, 1997 were $69,964
or $.06 per share compared to $472,845 or $.42 per share for the
corresponding period of last year.  As indicated above, the net earnings
decrease was due mainly to reduced sales. Selling , general and
administrative expenses increased by approximately 16%. No one material
factor  accounted for this increase. The increase in accounts receivable
in the Statements of Cash Flows is the result of shipments made toward the
end of the period. The majority of these receivables have already been
collected. 

The increase in inventories shown in the Statements of Cash Flows
reflects additional  purchasing during the second quarter of the
current year due to an increase in our backlog. However, the net
inventories shown on the Balance Sheets at  December 31, and June 30,
1997 were relatively the same.

Liquidity and Capital Expenditures

As of  December 31, 1997 the total cash and short-term investments
was $10,298,946 as compared to $12,123,583 as of June 30, 1997. This
decrease in cash and short-term investments at the end of the period
is substantially attributable to the increases in inventories and
accounts receivable. Most of these receivables have already been paid,
and the Company feels that its reserve is adequate.


                              - 8 -

<PAGE>


The Company, in the first half of fiscal 1998 funded its operations
with cash flows from operating activities and investing activities.
Management currently feels that during the balance of the fiscal year,
funds from these activities will be adequate to meet funding requirements.
For the first half of fiscal 1998 capital expenditures were approximately
$98,856.


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

Under existing authorizations, as of  December 31, 1997, funds in the
amount of $1,884,000 were available for the continuing repurchase of
the Company's shares.

Business  Outlook

Customer order patterns are inherently difficult to predict. As previously
disclosed, one of the Company's major customers has announced the
consolidation and relocation of several of its facilities and various
personnel. The transition stage of this consolidation is still causing
delays in both ongoing and newly proposed programs, however based on the
incoming flow of new business this situation shows definite signs of easing.
At the present time, the Company does not know what the final effect this
will have on the receipt of pending new business from this customer.        

The backlog as of  December 31, 1996 was  $10,031,312. The backlog as of
December 31, 1997 was $11,494,387. As a positive sign, for the past
twelve months, the Company has been receiving orders at a faster rate
than those being shipped. This was particularly evident in the quarter
recently ended, during which the Company received in excess of $7,000,000
in new orders. A sizable portion of these orders were connected with the
establishment of a repair site for our high power radar transmitters. The
Company is  still anticipating a new contract for additional transmitters.
Despite the significant sales decrease in this period, management
anticipates that sales for the second half of fiscal 1998 will approximate
or exceed those of the second half of fiscal 1997.

The Company is continuing to expand its Sales and Marketing departments.
Various specifics concerning the products we are concentrating on are
addressed in both the President's message accompanying our 1997 Annual
Report and in our most recently filed Form 10-K in Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Business Outlook."  Management currently continues to
anticipate that the course of action  taken will enhance the Company's
revenues and profitability in future periods.

Other Matters

A dividend in the amount of $.70 per share was declared payable
November 21, 1997 to shareholders of record on October 24, 1997.

                          - 9 -

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The Company is aware of the problems which may arise at the turn
of the century as regards the programming of our computers to
accommodate the year 2000. All necessary steps have been taken
to assure that this transition will be made smoothly. The cost
of these efforts has been, and will continue to be minimal.

Cautionary Statement for Purposes of the "Safe Harbor" Provisions
of the Private Securities Litigation Reform Act of 1995

It should be noted that certain statements in this Management's
Discussion and Analysis of Financial Condition and Results of
Operations are "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended,
and are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act  of 1995. These forward-looking
statements represent the Company's current expectations or beliefs
concerning future events. The matters covered by these statements
are subject to certain risks and uncertainties that could cause actual
results to differ materially from those set forth in the forward-looking
statements, including the Company's dependence on timely development,
introduction and customer acceptance of new products, the impact of
competition and price erosion, as well as supply and manufacturing
constraints and other risks and uncertainties. The foregoing list
should not be construed as exhaustive, and the Company disclaims any
obligation subsequently to revise any forward-looking statements to
reflect events or circumstances after the date of such statements or
to reflect the occurrence of anticipated or unanticipated events. The
Company wishes to caution readers not to place undue reliance on any
such forward-looking statements, which speak only as of the date made.






                          - 10 -

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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

	At the 1997 Annual Meeting of Shareholders held on December 5, 1997
	three shareholder proposals, none of which received
        a majority of the votes cast, were included in the proxy
        statement as follows:

	Proposal 1
			
	A recommendation to the Board of Directors that the 1989
        Shareholder Rights Plan be redeemed.

	Proposal 2

	A recommendation to the Board of Directors to
        amend the corporate  bylaws so that the Board
        of Directors would consist of a majority of independent
        Directors and that each Director be required to be a
	shareholder.

	Proposal 3

	A recommendation to the Board of Directors to
        declassify the Board so that all directors
        are elected each year.

	The result of the voting was as follows:

                        Proposal 1         Proposal 2              Proposal 3
        For                321,742            210,469                 311,387
        Against            580,710            690,172                 589,254
        Abstain              4,150              5,961                   5,961
        Broker non-votes   156,559            156,559                 156,559
			

Item 5.	Other Information	

			None during the quarter.


Item 6.	Exhibits and Reports on Form 8-K

			(a) Exhibits

		
                   27   Financial Data Schedule (for electronic filing only)

			(b) Reports on Form 8-K

			    No reports on Form 8-K were filed during the quarter ended
                            December 31, 1997. 






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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



               
   12 February 1998     
       Date 





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