EXHIBIT 10(p)



                      RESTRICTED STOCK PLAN
                    FOR NON-EMPLOYEE DIRECTORS
                    --------------------------

                  (As Amended February 11, 1997)



1.  Purpose.  This Restricted Stock Plan for Non-Employee
Directors ("the Plan") is intended to attract and retain the
services of experienced and knowledgeable independent directors
of Cummins Engine Company, Inc. ("the Company") for the benefit
of the Company and its stockholders and to provide additional
incentive for such Directors to continue to work for the best
interests of the Company and its stockholders.

2.  Stock Available for Awards.  No additional shares of the
Company's common stock ("Common Stock") shall be reserved for
issuance under the Plan.  Instead, the number of shares available
under the Plan shall be integrated with the number available for
awards pursuant to the Company's 1992 Stock Incentive Plan ("the
SIP").  Awards made under this Plan shall reduce the number of
shares of Common Stock available for awards under the SIP.

3.  Administration.  The Plan shall be administered by the Board
of Directors of the Company ("the Board").  Subject to the
express provisions of the Plan, the Board shall have plenary
authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, to determine the terms and
provisions of the restrictions on Common Stock awards (which
shall comply with and be subject to the terms and conditions of
the Plan) and to make all other determinations necessary or
advisable for the administration of the Plan.  The Board's
determinations of the matters referred to in this Paragraph 3
shall be conclusive.

4.  Participation in the Plan.  Persons who are now or shall
become incumbent Directors of the Company who are not at the
respective times employees of the Company or any subsidiary of
the Company shall be eligible to participate in the Plan ("an
Eligible Director").  A Director of the Company shall not be
deemed to be an employee of the Company solely by reason of the
existence of a consulting contract or arrangement between such
Director and the Company or any subsidiary thereof pursuant to
which the Director agrees to provide consulting services as an
independent consultant on a regular or occasional basis for a
stated consideration.

5.  Awards.  Each Eligible Director shall automatically receive,
in payment of a portion of his or her annual Board retainer fee,
an annual award of Common Stock, restricted as to transfer for a
period of six (6) months following the date of the award.  In the
case of an initial award, the restriction period shall end six
(6) months following the date of stockholder approval of the
Plan.  The number of shares in each such annual award shall be
equal to $18,000 divided by the average of the closing prices of
Common Stock as reported on the composite tape of the New York
Stock Exchange for the twenty (20) consecutive trading days
immediately preceding the date of the award.  An initial
automatic award to each Eligible Director shall be effective as
of July 13, 1993, subject to stockholder approval of the Plan.
Following the initial award, each Eligible Director shall
automatically receive the award on the date of each Annual
Meeting of Shareholders of the Company.  The Company reserves the
right to legend the share certificates for an appropriate period
of time and to take other actions designed to assure compliance
with applicable securities laws.

6.  Changes in Present Common Stock.  In the event of any merger,
consolidation, reorganization, recapitalization, stock dividend,
stock split or other change in the corporate structure or
capitalization affecting the Company's present Common Stock,
appropriate adjustment shall be made by the Board in the number
and kind of shares which are or may be awarded hereunder.

7.  Effective Date and Duration of the Plan.  The Plan became
effective as of July 13, 1993, the date of its adoption by the
Board.  The Plan shall terminate on December 31, 2002 (unless
earlier discontinued by the Board) but such termination shall not
affect the rights of the holder of any Common Stock subject to
restriction on such date of termination.

8.  Amendment of the Plan.  The Board may suspend or discontinue
the Plan or revise or amend it in any respect whatsoever,
provided, however, that without approval of the stockholders, no
revision or amendment shall increase the number of shares subject
to the Plan (except as provided in Section 6), that cannot be
funded with treasury shares of Common Stock that were previously
outstanding and listed on the New York Stock Exchange.

9.  Governing Law.  This Plan and all determinations made and
actions taken pursuant hereto, to the extent not otherwise
governed by securities laws of the United States, shall be
governed by the laws of the State of Indiana and construed
accordingly.