SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                    Form 10-Q

      (Mark One)

       [X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
             ENDED MARCH 31, 1998 OR

       [  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE   
             SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
             FROM _______________ TO _______________


       Commission file number 1-2199


                           ALLIS-CHALMERS CORPORATION             
             (Exact name of registrant as specified in its charter)


                 Delaware                                   39-0126090   
    (State or other jurisdiction of                        (I.R.S. Employer
      incorporation or organization)                      Identification No.)


         Box 512, Milwaukee, Wisconsin                         53201-0512    
     (Address of principal executive offices)                  (Zip code)


                                 (414)475-2000                             
               Registrant's telephone number, including area code

                  

   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    
    

   Indicate by check mark whether the registrant has filed all documents and
   reports required to be filed by Sections 12, 13 or 15(d) of the Securities
   Exchange Act of 1934 subsequent to the distribution of securities under a
   plan confirmed by a court.  Yes   X   No      

   At May 12, 1998 there were 1,003,028 shares of Common Stock outstanding.  

   <PAGE>

   PART I.  FINANCIAL INFORMATION

   ITEM 1.  FINANCIAL STATEMENTS

   ALLIS-CHALMERS CORPORATION AND CONSOLIDATED SUBSIDIARIES

   STATEMENT OF OPERATIONS



                                                  Three Months Ended
                                                       March 31   
                                                 1998          1997 
                                             (thousands, except per share)

   Sales                                       $   1,503         $1,028
   Cost of sales                                   1,017            817
                                                 -------        -------
       Gross Margin                                  486            211

   Marketing and administrative expense              359            369
                                                 -------        -------

       Income/(Loss) from Operations                 127           (158)
                                                 -------        -------
   Other income (expense)
      Interest income                                  6             15
      Interest expense                                (9)            (8)
      Pension expense                                  0           (466)
      Other                                           13             13
                                                 -------        -------

       Net Income/(Loss)                       $     137        $  (604)
                                                 =======        =======

       Net Income/(Loss) per Common Share      $     .14        $  (.60)
                                                 =======        =======

                        STATEMENT OF ACCUMULATED DEFICIT

                Three Months Ended March 31        1998           1997 
                                                         (thousands)

   Accumulated deficit - beginning of year     $ (76,291)       $ (9,746)
   Net income/(loss)                                 137            (604)
                                                 -------         -------
   Accumulated deficit - March 31              $ (76,154)       $(10,350)
                                                 =======         =======

   This interim statement is unaudited.

   The accompanying Notes are an integral part of the Financial Statements.

   <PAGE>

   ALLIS-CHALMERS CORPORATION AND CONSOLIDATED SUBSIDIARIES

   STATEMENT OF FINANCIAL CONDITION

                                              March 31,    December 31,
                                               1998           1997  
                                                    (thousands)
   Assets
    
   Cash and short-term investments             $  454      $   699
   Trade receivables, net                       1,195          683
   Inventories, net                               156          101
   Other current assets                            39          121
                                               -------     -------
          Total Current Assets                  1,844        1,604

   Net property, plant and equipment            1,162        1,107
                                              -------      -------
          Total Assets                         $3,006      $ 2,711
                                              =======      =======

   Liabilities and Shareholders' Deficit

   Current maturities of long-term debt        $   63      $    38
   Trade accounts payable                         274          219
   Accrued employee benefits                      152          123
   Reserve for legal expenses                     174          174
   Accrued pension liability                   68,801       68,801
   Other current liabilities                      140          110
                                               -------     -------
          Total Current Liabilities            69,604       69,465

   Accrued pension liability                        -            -
   Accrued postretirement benefit
     obligations                                  977          990
   Long-term debt                                 272          240

   Shareholders' deficit 
     Common stock, ($.15 par value,
      authorized 2,000,000 shares, 
      outstanding 1,003,028 at
      March 31, 1998 and December 31,
      1997)                                       152          152
     Capital in excess of par value             8,155        8,155
     Accumulated deficit (accumulated
      deficit of $424,208 eliminated on
      December 2, 1988)                       (76,154)     (76,291)
     Pension liability adjustment                   -            -
                                              -------      -------
          Total Shareholders' Deficit         (67,847)     (67,984)
                                              -------      -------
   Commitments and contingent liabilities  

          Total Liabilities and Shareholders'
           Deficit                             $3,006      $ 2,711
                                              =======      =======


   This interim statement is unaudited.

   The accompanying Notes are an integral part of the Financial Statements.

   <PAGE>

   ALLIS-CHALMERS CORPORATION AND CONSOLIDATED SUBSIDIARIES

   STATEMENT OF CASH FLOWS

                                                 Three Months Ended
                                                      March 31         
                                                   1998       1997 
                                                     (thousands)

   Cash flows from operating activities:
     Net income/(loss)                          $ 137     $(604)
     Adjustments to reconcile net income/
       (loss) to net cash provided (used)
       by operating activities:
         Depreciation and amortization             46        35
         Change in working capital:
           Increase in receivables, net          (512)     (103)
           Decrease (increase) in inventories     (55)       16
           Increase in trade accounts payable      55        56
           (Decrease) increase in other current
             items                                141      (244)
           Increase in accrued pension liability,
             net                                    0       466
         Other                                    (13)      (31)
                                               ------    ------
           Net cash (used) by operating
             activities                         (201)      (409)

   Cash flows from investing activities:
     Capital expenditures                        (101)     (122)

   Cash flows from financing activities:
     Net proceeds from issuance of long-term
       debt                                        71         -
     Payment of long-term debt                    (14)      (13)
                                               ------    ------
           Net cash (used) by financing
            activities                             57       (13)
                                               ------    ------
   Net (decrease) in cash and short-term
    investments                                  (245)     (544)

   Cash and short-term investments at
    beginning of period                           699     1,568
                                               ------    ------
   Cash and short-term investments at 
    end of period                               $ 454    $1,024
                                               ======    ======
   Supplemental information - interest paid     $   9    $    7
                                               ======    ======


   This interim statement is unaudited.

   The accompanying Notes are an integral part of the Financial Statements.

   <PAGE>

   NOTES TO FINANCIAL STATEMENTS

   NOTE 1 - ACCOUNTING POLICIES

   This interim financial data should be read in conjunction with the
   consolidated financial statements and related notes, management's
   discussion and analysis and other information included in the Company's
   1997 Annual Report.

   All adjustments considered necessary for a fair presentation of the
   results of operations have been included in the unaudited financial
   statements.  The results of operations for any interim period are not
   necessarily indicative of Allis-Chalmers operating results for a full
   year.

   NOTE 2 - POSTRETIREMENT OBLIGATIONS--PENSION PLAN

   In 1994, the Company's independent pension actuaries changed the
   assumptions for mortality and administrative expenses used to determine
   the liabilities of the Allis-Chalmers Consolidated Pension Plan
   (Consolidated Plan).  Primarily as a result of the changes in mortality
   assumptions to reflect decreased mortality rates of the Company's
   retirees, the Consolidated Plan was underfunded on a present value basis. 
   In the first quarter of 1996, the Company made a cash contribution to the
   Consolidated Plan in the amount of $205,000.  The Company did not,
   however, have the financial resources to make the other required payments
   to the Consolidated Plan during 1996 and 1997.  Given the inability of the
   Company to fund such obligations with its limited financial resources, in
   February 1997, Allis-Chalmers applied to the Pension Benefit Guaranty
   Corporation (PBGC) for a "distress" termination of the Consolidated Plan
   under section 4041(c) of the Employee Retirement Income Security Act of
   1974, as "amended" (ERISA).  The PBGC approved the distress termination
   application in September 1997 and agreed to a plan termination date of
   April 14, 1997.  The PBGC became trustee of the terminated Consolidated
   Plan on September 30, 1997.

   Upon termination of the Consolidated Plan, Allis-Chalmers and its
   subsidiaries incurred a liability to the PBGC for an amount equal to the
   Consolidated Plan's unfunded benefit liabilities.  Allis-Chalmers and its
   subsidiaries also have liability to the PBGC, as trustee of the terminated
   Consolidated Plan, for the outstanding balance of the Consolidated Plan's
   accumulated funding deficiencies.  The PBGC has estimated that the
   unfunded benefit liabilities and the accumulated funding deficiencies
   (together, the PBGC Liability) total approximately $67.9 million.

   In September 1997, Allis-Chalmers and the PBGC entered into an agreement
   in principle for the settlement of the PBGC Liability (the PBGC
   Agreement).  The PBGC Agreement calls for the PBGC to release Allis-
   Chalmers and its subsidiaries from the PBGC Liability in return for that
   number of shares of Allis-Chalmers' common stock that represents 35% of
   the total number of shares issued and outstanding on a fully-diluted
   basis.

   The PBGC Agreement is subject to negotiation of definitive documentation
   and to satisfactory resolution of Allis-Chalmers tax obligations with
   respect to the Consolidated Plan under section 4971 of the Internal
   Revenue Code of 1986, as amended (Code).  Section 4971(a) of the Code
   imposes, for each taxable year, a first-tier tax of 10 percent on the
   amount of the accumulated funding deficiency under a plan like the
   Consolidated Plan.  Section 4971(b) of the Code imposes an additional,
   second-tier tax equal to 100 percent of such accumulated funding
   deficiency if the deficiency is not "corrected" within a specified period. 
   Liability for the taxes imposed under section 4971 extends, jointly and
   severally, to Allis-Chalmers and to its commonly-controlled subsidiary
   corporations.

   Prior to its termination, the Consolidated Plan had an accumulated funding
   deficiency in the taxable years 1995, 1996, and 1997.  Those deficiencies
   have resulted, or will result, in first-tier taxes under Code section
   4971(a) of approximately $900,000.

   On March 2, 1998, Allis-Chalmers sent the Internal Revenue Service (IRS) a
   formal Offer in Compromise of the Company's tax liability under Code
   section 4971.  If accepted by the IRS, the Offer in Compromise will (i)
   require Allis-Chalmers to pay the IRS $25,000, plus interest from March 2,
   1998 and (ii) extinguish the Company's tax liability under Code section
   4971, subject to the standard conditions attendant to an Offer in
   Compromise.

   Although the IRS has not yet responded to the Offer in Compromise, Allis-
   Chalmers' management is hopeful that a mutually acceptable settlement can
   be achieved.  If a satisfactory settlement cannot be reached with IRS, or
   if definitive documentation of the PBGC Agreement is not achieved for any
   other reason, Allis-Chalmers will evaluate other alternatives, including a
   bankruptcy filing. 


   ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS

   Results of Operations

   Sales in the first quarter of 1998 totaled $1,503,000 an increase of 46%
   from $1,028,000 in the first quarter of 1997.  This significant increase
   was due to strong market conditions, new customers served and expanded
   services provided.  Operations of the Company consist of Houston Dynamic
   Service, Inc. (HDS), the Company's machinery repair and service
   subsidiary.  

   Gross margin, as a percentage of sales, was 32% in the first quarter of
   1998, an increase from 20.5% in 1997.  This significant increase was due
   to selective, high margin and technical work, performed in a stronger
   market environment.

   Marketing and administrative expense was $359,000 in the first quarter of
   1998 compared with $369,000 in the prior year.  The slight decrease was
   significant considering the aggressive sales and marketing programs.  A
   significant portion of the Company's administrative expenses relates to
   expenses for Securities and Exchange Commission and other governmental
   reporting as well as legal, accounting and audit, tax, insurance and other
   corporate requirements of a publicly held company.  

   There was no pension expense in the first quarter of 1998 as compared to
   pension expense in the first quarter of 1997 of $466,000.  See Note 2 for
   further discussion.

   The Company incurred a net profit of $137,000, or $.14 per common share,
   in the first quarter of 1998 compared with a net loss of $604,000, or $.60
   per common share, in the same period of 1997.


   Financial Condition and Liquidity

   Cash and short term investments totaled $454,000 at March 31, 1998, a
   decrease from $699,000 at December 31, 1997.  The decrease in cash was due
   to increased sales which resulted in an increase in trade receivables and
   inventories.  However, cash collections of $200,000 were received the day
   after the period ended.

   Net trade receivables, at March 31, 1998 were $1,195,000, reflecting an
   increase from the December 31, 1997 level of $683,000, due primarily to
   increased sales.  However, cash collections of $200,000 were received the
   day after the period ended, thereby, reducing the level.

   Inventory at March 31, 1998 was $156,000, an increase from $101,000 at
   year end 1997 due to material required to support the backlog of sales
   orders.

   Net property, plant and equipment was $1,162,000 at March 31, 1998, an
   increase from $1,107,000 million at year end 1997.  For the three months
   ending March 31, 1998, $101,000 of capital expenditures were made to
   insure cost competitiveness and the ability to reach new markets.

   Other current liabilities at March 31, 1998 were $140,000, an increase
   from $110,000 at December 31, 1997.  

   The A-C Reorganization Trust, pursuant to the Plan of Reorganization,
   funds all costs incurred by Allis-Chalmers which relate to implementation
   of the Plan of Reorganization, thus avoiding additional demands on the
   liquidity of the Company.  Such costs include an allocated share of
   certain expenses for Company employees, professional fees and certain
   other administrative expenses.

   In 1994, the Company's independent pension actuaries changed the
   assumptions for mortality and administrative expenses used to determine
   the liabilities of the Consolidated Plan.  Primarily as a result of the
   changes in mortality assumptions to reflect decreased mortality rates of
   the Company's retirees, the Consolidated Plan was underfunded on a present
   value basis.  In the first quarter of 1996, the Company made a cash
   contribution to the Consolidated Plan in the amount of $205,000.  The
   Company did not, however, have the financial resources to make the other
   required payments to the Consolidated Plan during 1996 and 1997.  Given
   the inability of the Company to fund such obligations with its limited
   financial resources, in February 1997, Allis-Chalmers applied to the PBGC
   for a "distress" termination of the Consolidated Plan under section
   4041(c) of the Employee Retirement Income Security Act of 1974, as
   "amended" (ERISA).  The PBGC approved the distress termination application
   in September 1997 and agreed to a plan termination date of April 14, 1997. 
   The PBGC became trustee of the terminated Consolidated Plan on September
   30, 1997.

   Upon termination of the Consolidated Plan, Allis-Chalmers and its
   subsidiaries incurred a liability to the PBGC for an amount equal to the
   Consolidated Plan's unfunded benefit liabilities.  Allis-Chalmers and its
   subsidiaries also have liability to the PBGC, as trustee of the terminated
   Consolidated Plan, for the outstanding balance of the Consolidated Plan's
   accumulated funding deficiencies.  The PBGC has estimated that the
   unfunded benefit liabilities and the accumulated funding deficiencies
   (together, the PBGC Liability) total approximately $67.9 million.

   In September 1997, Allis-Chalmers and the PBGC entered into an agreement
   in principle for the settlement of the PBGC Liability (the PBGC
   Agreement).  The PBGC Agreement calls for the PBGC to release Allis-
   Chalmers and its subsidiaries from the PBGC Liability in return for that
   number of shares of Allis-Chalmers' common stock that represents 35% of
   the total number of shares issued and outstanding on a fully-diluted
   basis.

   The PBGC Agreement is subject to negotiation of definitive documentation
   and to satisfactory resolution of Allis-Chalmers tax obligations with
   respect to the Consolidated Plan under section 4971 of the Internal
   Revenue Code of 1986, as amended (Code).  Section 4971(a) of the Code
   imposes, for each taxable year, a first-tier tax of 10 percent on the
   amount of the accumulated funding deficiency under a plan like the
   Consolidated Plan.  Section 4971(b) of the Code imposes an additional,
   second-tier tax equal to 100 percent of such accumulated funding
   deficiency if the deficiency is not "corrected" within a specified period. 
   Liability for the taxes imposed under section 4971 extends, jointly and
   severally, to Allis-Chalmers and to its commonly-controlled subsidiary
   corporations.

   Prior to its termination, the Consolidated Plan had an accumulated funding
   deficiency in the taxable years 1995, 1996, and 1997.  Those deficiencies
   have resulted, or will result, in first-tier taxes under Code section
   4971(a) of approximately $900,000.

   On March 2, 1998, Allis-Chalmers sent the IRS a formal Offer in Compromise
   of the Company's tax liability under Code section 4971.  If accepted by
   the IRS, the Offer in Compromise will (I) require Allis-Chalmers to pay
   the IRS $25,000, plus interest from March 2, 1998 and (ii) extinguish the
   Company's tax liability under Code section 4971, subject to the standard
   conditions attendant to an Offer in Compromise.

   Although the IRS has not yet responded to the Offer in Compromise, Allis-
   Chalmers' management is hopeful that a mutually acceptable settlement can
   be achieved.  If a satisfactory settlement cannot be reached with IRS, or
   if definitive documentation of the PBGC Agreement is not achieved for any
   other reason, Allis-Chalmers will evaluate other alternatives, including a
   bankruptcy filing. 

   The Environmental Protection Agency (EPA) and certain state environmental
   protection agencies have requested information in connection with eleven
   potential hazardous waste disposal sites in which products manufactured by
   Allis-Chalmers before consummation of the Plan of Reorganization were
   disposed.  The EPA has claimed that Allis-Chalmers is liable for cleanup
   costs associated with several additional sites.  The EPA's claims with
   respect to one other site were withdrawn in 1994 based upon settlements
   reached with the EPA in the bankruptcy proceeding.  In addition, certain
   third parties have asserted that Allis-Chalmers is liable for cleanup
   costs or associated EPA fines in connection with additional sites.  In one
   of these instances a former site operator has joined Allis-Chalmers and 47
   other potentially responsible parties as a third-party defendant in a
   lawsuit involving cleanup of one of the sites.  In each instance the
   environmental claims asserted against the Company involve its
   prebankruptcy operations.  Accordingly, Allis-Chalmers has taken the
   position that all cleanup costs or other liabilities related to these
   sites were discharged in the bankruptcy.  In one particular site, the
   EPA's Region III has concurred with the Company's position that claims for
   environmental cleanup were discharged pursuant to the bankruptcy.  While
   each site is unique with different circumstances, the Company has notified
   other Regional offices of the EPA of this determination associated with
   the Region III site.  The Company has not received responses from the
   other Regional offices.  No environmental claims have been asserted
   against the Company involving its postbankruptcy operations.

   The Company's principal sources of cash include earnings from the
   operations of HDS and interest income on marketable securities.  The cash
   requirements needed for the administrative expenses associated with being
   a publicly held company are significant, and the Company will continue to
   use cash generated by operations to fund such expenses.

   The necessity to assure liquidity emphasizes the need for the Company to
   continue in a prudent manner its search for appropriate acquisition
   candidates in order to increase the Company's operating base and generate
   positive cash flow.  


   PART II.  OTHER INFORMATION

   ITEM 1. LEGAL PROCEEDINGS

   See PART I. Item 2, "Management's Discussion and Analysis."


   ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

   (a)  Exhibits:  (27) - Financial Data Schedule

   (b)  Reports on Form 8-K  - No report on Form 8-K was filed during the
   first quarter of 1998.


   <PAGE>

                                    SIGNATURE


   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.

                                           Allis-Chalmers Corporation
                                                  (Registrant)


                                            /s/ John T. Grigsby, Jr.    
                                           John T. Grigsby, Jr.
                                           Vice Chairman, Executive Vice
                                           President and Chief Financial
                                           Officer

   May 15, 1998