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 SEPTEMBER 30, 1997 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 November 7, 1997 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      Nine Months Ended
                                     September 30           September 30  
                                  1997          1996      1997          1996
                                      (Thousands, except per share)

   Sales                        $    813    $    968     $  2,826   $  3,109 
   Cost of sales                     652         792        2,186      2,301 
                                 -------     -------      -------    ------- 
       Gross Margin                  161         176          640        808 

   Marketing and
    administrative expense           356         307        1,080      1,006 
                                 -------     -------      -------    ------- 
       Loss from Operations         (195)       (131)        (440)      (198)

   Other income (expense)
      Interest income                 10          16           36         50 
      Interest expense                (8)         (8)         (28)       (27)
   Pension expense                  (465)       (338)      (1,397)    (1,014)
      Other                            0           0           13         11 
                                 -------     -------      -------   -------- 
       Net Loss                 $   (658)   $   (461)    $ (1,816)  $ (1,178)
                                 =======     =======      =======   ======== 
    Net Loss per
      Common Share              $   (.66)   $   (.46)    $  (1.81)  $  (1.17)
                                 =======     =======      =======   ======== 


                      STATEMENT OF ACCUMULATED DEFICIT

                 Nine Months Ended September 30       1997          1996  
                                                   (thousands)

   Accumulated deficit - beginning of year         $  (9,746)     $(8,018)
   Net loss                                           (1,816)      (1,178)
                                                    --------      -------
   Accumulated deficit - September 30               $(11,562)     $(9,196)
                                                    ========      =======

   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

                                           September 30,  December 31,
                                               1997           1996
                                                  (Thousands)
   Assets
    
   Cash and short-term investments           $  822        $ 1,568
   Trade receivables, net                       461            652
   Non-trade receivables                         21             36
   Inventories, net                             112             93
   Other current assets                         146            100
                                            -------        -------
          Total Current Assets                1,562          2,449

   Net property, plant and equipment          1,073            937
                                            -------        -------
          Total Assets                       $2,635        $ 3,386
                                            =======        =======

   Liabilities and Shareholders' Deficit

   Current maturities of long-term debt      $   49         $   54
   Trade accounts payable                        79             82
   Accrued employee benefits                    139            136
   Accrued pension liability                  8,347          6,949
   Reserve for legal expenses                    50             50
   Other current liabilities                    126            356
                                            -------        -------
          Total Current Liabilities           8,790          7,627

   Accrued pension liability                  8,131          8,131
   Accrued postretirement benefit
    obligations                                 931            993
   Long-term debt                               243            279

   Shareholders' deficit 
     Common stock, ($.15 par value,
      authorized 2,000,000 shares, 
      outstanding 1,003,028 at
      September 30, 1997 and 
      December 31, 1996)                        152            152
     Capital in excess of par value           8,155          8,155
     Accumulated deficit (accumulated
      deficit of $424,208 eliminated 
      on December 2, 1988)                  (11,562)        (9,746)
     Pension liability adjustment           (12,205)       (12,205)
                                            -------        -------
          Total Shareholders' Deficit       (15,460)       (13,644)

   Commitments and contingent
    liabilities                                   -              -
                                            -------        -------
          Total Liabilities and
           Shareholders' Deficit             $2,635        $ 3,386
                                            =======        =======


   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


                                                   Nine Months Ended
                                                      September 30       
                                                   1997            1996   
                                                       (thousands)

   Cash flows from operating activities:
     Net loss                                    $(1,816)        $ (1,178)
     Adjustments to reconcile net loss to
       net cash (used) provided by 
       operating activities:
         Depreciation and amortization               107               58
         Gain on sale of fixed assets                (13)              (3)
         Change in working capital:
           Decrease in receivables, net              206              413
           (Increase) decrease in inventories        (19)              53
           (Decrease) increase in trade accounts
            payable                                   (3)              54
           Decrease in other current items          (273)             (70)
         Increase in accrued pension
           liability, net                          1,398              812
         Other                                       (62)             (64)
                                                  ------          ------
           Net cash (used) provided by
             operating activities                   (475)              75

   Cash flows from investing activities:
     Capital expenditures                           (245)             (42)
     Proceeds from sale of equipment                  15                3
                                                 -------          -------
           Net cash used by investing
            activities                              (230)             (39)

   Cash flows from financing activities:
     Net proceeds from issuance of
       long-term debt                                  -              270
     Payment of long-term debt                       (41)            (299) 
                                                 -------          -------
           Net cash used by financing
             activities                              (41)             (29)
                                                 -------          -------
   Net increase (decrease) in cash and
    short-term investments                          (746)               7

   Cash and short-term investments at
    beginning of period                            1,568            1,881
                                                 -------          -------
   Cash and short-term investments at 
    end of period                                $   822         $  1,888
                                                 =======          =======
   Supplemental information - interest
    paid                                         $    28         $     27
                                                 =======          =======



   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
   1996 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

   Effective January 1, 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, it was determined that the Consolidated Plan was underfunded on
   a present value basis by approximately $9.0 million.  Subsequent updates
   to the underfunding calculation increased the present value of the
   underfunding obligation to $15.1 million as of December 31, 1996. 
   Pursuant to ERISA minimum funding requirements, on January 15, 1996 the
   Company made a cash contribution to the Consolidated Plan in the amount of
   $205,000, however, subsequent required contributions were not paid. 
   Because such unpaid contributions exceeded $1,000,000, a lien was filed by
   the Pension Benefit Guaranty Corporation (PBGC) against the Company in
   favor of the Consolidated Plan.  Given the inability of the Company to
   fund the entire underfunding obligation with its current financial
   resources, a Notice of Intent to terminate the Consolidated Plan was filed
   with the PBGC on February 12, 1997 to become effective April 14, 1997.

   On September 30, 1997, the PBGC issued a determination approving the
   Company's request for the distress termination of the Consolidated Plan
   effective April 14, 1997, citing the significant underfunding of the
   Consolidated Plan and the fact that the Company demonstrated that it does
   not have the resources to fund the cash contributions necessary to meet
   ERISA funding requirements.

   In connection with the PBGC's action, the Company incurred a statutory
   liability to the PBGC for the amount of the Consolidated Plan's
   underfunded benefit liabilities, calculated using ERISA termination
   assumptions to be $63,000,000.  The Company may also have liability for
   certain taxes arising from the Consolidated Plan's accumulated funding
   deficiency.

   The Company and the PBGC have entered into an agreement in principle to
   settle all Consolidated Plan- related obligations to the PBGC.  The
   agreement in principle, which is subject to definitive documentation and
   to an acceptable resolution of the Company's tax liability, will give PBGC
   35% of the Company's common stock.

   The Company has initiated discussions with the Internal Revenue Service
   (IRS) concerning the Consolidated Plan-related taxes.  Although it is not
   possible to predict the outcome of discussions with the IRS, failure to
   reach an acceptable agreement could jeopardize the continuation of the
   Company. 


   ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS

   Results of Operations

   Sales in the third quarter of 1997 totaled $813,000 a decrease from
   $968,000 in the third quarter of 1996.  Operations of the Company consist
   of Houston Dynamic Service, Inc. (HDS), the Company's machinery repair and
   service subsidiary.  Through September 1997 sales were $2,826,000 compared
   with $3,109,000 through the same period of 1996.  The slight decline was
   the result of very competitive pricing in the market place.

   Gross margin, as a percentage of sales, was 19.8% in the third quarter of
   1997, an increase from 18.2% in 1996.  Gross margin through September 1997
   was 22.6% compared with 26.0% in the same period of the prior year,
   primarily due to competitive pricing along with product mix.  

   Marketing and administrative expense was $356,000 in the third quarter of
   1997 compared with $307,000 in the prior year.  The increase is due to
   aggressive sales and marketing programs.  For the first nine months of
   1997, marketing and administrative expense was $1,080,000, a slight
   increase from the first nine months of the prior year of $1,006,000.  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.  

   Pension expense was $465,000 in the third quarter of 1997 which was a non-
   cash expense on the unfunded liability of approximately $15,100,000
   associated with the Consolidated Plan.  Pension expense in the third
   quarter of 1996 was $338,000.

   The Company incurred a net loss of $658,000, or $.66 per common share, in
   the third quarter of 1997 compared with a net loss of $461,000, or $.46
   per common share, in the same period of 1996.

   In the first nine months of 1997, the Company incurred a loss of
   $1,816,000 or $1.81 per common share compared with a loss of $1,178,000 or
   $1.17 per common share in the same period of 1996.


   Financial Condition and Liquidity

   Cash and short term investments totaled $822,000 at September 30, 1997, a
   decrease from $1,568,000 at December 31, 1996.

   Trade receivables, net at September 30, 1997 were $461,000, reflecting a
   decrease from the December 31, 1996 level of $652,000, primarily due to
   decreased sales.

   Inventory at September 30, 1997 was $112,000, an increase from $93,000 at
   year end 1996 due to material acquired for work in process. 

   Net property, plant and equipment was $1,073,000 at September 30, 1997 an
   increase from $937,000 at year end 1996.  For the nine months ending
   September 30, 1997, $245,000 of capital expenditures were made to insure
   cost competitiveness and ability to reach new markets.

   Long-term debt, including current maturities at September 30, 1997, was
   $292,000, a decrease from $333,000 at December 31, 1996. 

   Other current liabilities at September 30, 1997 were $126,000, a decrease
   from $356,000 at December 31, 1996.  A payment of approximately $198,000
   was made to the A-C Reorganization Trust for legal costs paid by the A-C
   Reorganization Trust on behalf of the Company during the first quarter of
   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 1988, the Plan of Reorganization provided for the contribution of $53.8
   million to the Company's then-existing 11 salaried and inactive hourly
   pension plans.  This funding, in addition to the then-existing assets in
   the pension plans, was used to establish a high-grade fixed income
   securities portfolio.  The market value of the portfolio assets was
   matched to the present value of the expected pension benefits and
   administrative expenses of the plans in a way intended to make the pension
   fund immune from interest rate fluctuations, thus substantially
   eliminating the need for future Company contributions.  Effective January
   1, 1989, the 11 remaining Allis-Chalmers pension plans were consolidated
   into a single plan, the Consolidated Plan.  Pursuant to its obligations
   under the Plan of Reorganization, the Company continued as the plan
   sponsor for the Consolidated Plan.

   For the years 1989 through 1994, retirees eligible for benefits under the
   Consolidated Plan as a group, outlived the projections based on the
   mortality assumptions used in the Plan of Reorganization for funding the
   Consolidated Plan.  During this period, actual administrative expenses
   were slightly in excess of assumed levels. 

   Effective January 1, 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 Plan. 
   Primarily as a result of the changes in mortality assumptions to reflect
   decreased mortality rates of the Company's retirees, it was determined
   that the Consolidated Plan was underfunded on a present value basis by
   approximately $9.0 million.  Subsequent updates to the underfunding
   calculation increased the present value of the underfunding obligation to
   $15.1 million as of December 31, 1996.  Pursuant to ERISA minimum funding
   requirements, on January 15, 1996 the Company made a cash contribution to
   the Consolidated Plan in the amount of $205,000, however, subsequent
   required contributions were not paid.  Because such unpaid contributions
   exceeded $1,000,000, a lien was filed by the PBGC against the Company in
   favor of the Consolidated Plan.  Given the inability of the Company to
   fund the entire underfunding obligation with its current financial
   resources, a Notice of Intent to terminate the Consolidated Plan was filed
   with the PBGC on February 12, 1997 to become effective April 14, 1997.

   On September 30, 1997, the PBGC issued a determination approving the
   Company's request for the distress termination of the Consolidated Plan
   effective April 14, 1997, citing the significant underfunding of the
   Consolidated Plan and the fact that the Company demonstrated that it does
   not have the resources to fund the cash contributions necessary to meet
   ERISA funding requirements.

   In connection with the PBGC's action, the Company incurred a statutory
   liability to the PBGC for the amount of the Consolidated Plan's
   underfunded benefit liabilities, calculated using ERISA termination
   assumptions to be $63,000,000.  The Company may also have liability for
   certain taxes arising from the Consolidated Plan's accumulated funding
   deficiency.

   The Company and the PBGC have entered into an agreement in principle to
   settle all Consolidated Plan-related obligations to the PBGC.  The
   agreement in principle, which is subject to definitive documentation and
   to an acceptable resolution of the Company's tax liability, will give PBGC
   35% of the Company's common stock.

   The Company has initiated discussions with the IRS concerning the
   Consolidated Plan-related taxes.  Although it is not possible to predict
   the outcome of discussions with the IRS, failure to reach an acceptable
   agreement could jeopardize the continuation of the Company.  

   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."

   <PAGE>


   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
   third quarter of 1997.



                                    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

   November 13, 1997

   <PAGE>

                                  EXHIBIT INDEX

   Exhibit No.               Description

      27             Financial Data Schedule