Exhibit 12

                             
Computation of Ratio of Earnings to Fixed Charges
                               
Year ended December 31  (in millions)    1998*   1997    1996    1995    1994

Fixed Charges:
  Interest expense                     $  748  $  617  $  592  $  603  $  520
  Rental expense                          145     140     140     142     170
    Total fixed charges before
     capitalized interest and
     preferred stock dividend
     of subsidiary                        893     757     732     745     690
  Capitalized interest                      -       -       -       -       2
  Preferred stock dividend of
   subsidiary                              55      50       -       -       -
    Total fixed charges                $  948     807  $  732  $  745  $  692

Earnings available for fixed charges:
  Earnings**                           $  837  $2,268  $2,067  $1,980  $1,602
  Less undistributed income in
   minority owned companies               (27)    (84)    (84)    (90)    (54)
  Add fixed charges before capitalized
   interest and preferred stock
   dividend of subsidiary                 893     757     732     745     690
    Total earnings available for
     fixed charges                     $1,703  $2,941  $2,715  $2,635  $2,238

Ratio of earnings to fixed
 charges (1)(2)                          1.80    3.64    3.71    3.54    3.23


(1) The ratio of earnings to fixed charges has been computed based on the 
    Company's continuing operations by dividing total earnings available for 
fixed charges, excluding capitalized interest, by total fixed charges.  
Fixed charges consist of interest, including capitalized interest and 
preferred stock dividend requirements of subsidiaries, and one-third of 
rent expense as representative of the interest portion of rentals.  Debt 
has been assigned to discontinued operations based on historical levels 
assigned to the businesses when they were continuing operations, 
adjusted for subsequent paydowns.  Discontinued operations consist of 
the Company's Insurance, Other Financial Services, and Third Party 
Financing and Real Estate businesses. 

(2) The Company's ratio of earnings to fixed charges includes the effect of 
the Company's finance subsidiaries, which primarily finance Xerox 
equipment.  Financing businesses are more highly leveraged and, 
therefore, tend to operate at lower earnings to fixed charges ratio 
levels than do non-financial businesses.

 * Excluding the effects of the charges recorded in connection with the 1998 
restructuring plan, the ratio of earnings to fixed charges would be 
3.55. 

** Sum of "Income before Income Taxes, Equity Income and Minorities' 
Interests" and "Equity in Net Income of Unconsolidated Affiliates."