FORM 10-Q

                     SECURITIES AND EXCHANGE COMMISSION

                           WASHINGTON, D.C.  20549

              X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
               For the quarterly period ended January 31, 1996

                 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
          OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
                  For the transition period from     to    

                                       Commission File No. 1-8709


                 Canal Capital Corporation and Subsidiaries               
           (Exact name of registrant as specified in its charter)


        Delaware                                         51-0102492      
  (State or other jurisdiction of                   (I.R.S. Employer
   incorporation or organization)                   Identification No.)

      717 Fifth Avenue, New York, NY                           10022      

  (Address of principal executive offices)                   (Zip Code)

  Registrant's telephone number, including area code   (212) 826-6040     


                                    NONE                                 
  Former name, former address and former fiscal year, if changed since
  last report.

  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  the  number  of  shares  outstanding  for each of the issuer's
  classes of common stock, as of the latest practical date:


      Title of each class          Shares outstanding at February 29, 1996
  Common stock, $0.01 par value                4,326,930

  (This document contains 25 pages)


   



                 CANAL CAPITAL CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                    JANUARY 31, 1996 AND OCTOBER 31, 1995


                                                JANUARY 31,   OCTOBER 31,
                                                    1996         1995
                                                (UNAUDITED)    (AUDITED) 
  ASSETS:

  CURRENT ASSETS:

    Cash and cash equivalents                  $   (11,197)   $   114,750
    Notes and accounts receivable                  316,055        241,778
    Art inventory (net of a valuation
      allowance of $500,000) at January 31, 
      1996 and October 31, 1995, respectively      500,000        500,000
    Prepaid expenses and other                     173,151        201,188 

      Total Current Assets                         978,009      1,057,716 
                                                

  NON-CURRENT ASSETS:

    Property on operating leases, net of
     accumulated depreciation of $5,969,934
     and $6,074,482 at January 31, 1996 and
     October 31, 1995, respectively              8,289,614      8,384,975 

    Art inventory non-current (net of
     valuation allowance of $500,000 at 
     January 31, 1996 and October 31, 1995,
     respectively                                4,693,931      4,900,595 



  Other Assets:

    Property held for development or resale      2,922,960      3,000,060
    Long-term investments                          480,091        480,091
    Deferred leasing and financing costs           133,189        147,913
    Deposits and other                             238,558        232,062 

                                                 3,774,798      3,860,126 

                                               $17,736,352    $18,203,412 






                                      2            


                 CANAL CAPITAL CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                    JANUARY 31, 1996 AND OCTOBER 31, 1995

                                                JANUARY 31,   OCTOBER 31,
                                                    1996         1995
                                                (UNAUDITED)    (AUDITED) 

  LIABILITIES & STOCKHOLDERS  EQUITY:


  CURRENT LIABILITIES:

    Short-term borrowings                      $         0    $         0
    Accounts payable and accrued expenses        2,413,482      2,618,467
    Accrued litigation settlement                        0              0
    Income taxes payable                            19,408         40,881
    Current portion of long-term debt              551,000         51,000 

      Total Current Liabilities                  2,983,890      2,710,348 


  Long-term debt, less current portion          10,642,817     11,379,242 


  Commitments and contingencies


  Stockholders  Equity:

    Preferred stock $0.01 par value:
      5,000,000 shares authorized; 2,434,998
      and 2,358,542 shares issued and out-
      standing at January 31, 1996 and 
      October 31, 1995, respectively and
      aggregate liquidation preference of
      $24,349,980 and $23,585,420 at 
      January 31, 1996 and October 31, 1995,
      respectively                                  24,350         23,585

    Common stock, $0.01 par value:
      10,000,000 shares authorized; 5,313,794
      shares issued and outstanding at 
      January 31, 1996 and October 31, 1995,
      respectively                                  53,138         53,138

    Paid-in capital                             26,505,471     26,468,008




                                      3


                 CANAL CAPITAL CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
               JANUARY 31, 1996 AND OCTOBER 31, 1995 (cont d)
                                        


                                                JANUARY 31,   OCTOBER 31,
                                                    1996         1995
                                                (UNAUDITED)    (AUDITED) 


  Retained earnings (deficit)                  $ (9,733,098)  $(9,690,693)

  Less-Valuation Reserve                         (1,736,671)   (1,736,671)

  Less-986,865 shares of common
   stock held in treasury, at cost             (11,003,545)   (11,003,545)

                                                  4,109,645      4,113,822


                                               $ 17,736,352   $ 18,203,412
































                                      4



                  CANAL CAPITAL CORPORATION & SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
            FOR THE THREE MONTHS ENDED JANUARY 31, 1996 AND 1995



                                                   1996           1995
                                               (UNAUDITED)    (UNAUDITED)

  Real Estate Operations:

   Real Estate Revenues:

    Sale of real estate                        $    476,621   $     49,345
    Rental income                                   536,418        513,730
    Ground lease income                             234,000        248,000
    Volume based rental income                      204,002        223,169
    Other income                                      1,613          7,247


                                                  1,452,654      1,041,491


  Real Estate Expenses:

    Cost of real estate sold                        159,733         24,878
    Labor, operating and maintenance                238,724        200,175
    Depreciation and amortization                    91,413         91,073
    Taxes other than income taxes                    90,000         96,300
    Provision for litigation settlement                   0              0
    Bad debt expense                                      0              0
    General and administrative                       28,310         22,565


                                                    608,180        434,991
                                               
  Income From Real Estate Operations                844,474        606,500



  Art Operations:

   Art Revenues:

    Sales                                           104,400        101,750
    Other revenues                                        0              0


                                                    104,400        101,750








                                      5








                  CANAL CAPITAL CORPORATION & SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
        FOR THE THREE MONTHS ENDED JANUARY 31, 1996 AND 1995 (Cont d)

                                                   1996           1995
                                               (UNAUDITED)    (UNAUDITED)

  Art Expenses:

    Cost of art sold                                219,633       117,834
    Valuation reserve                                     0             0
    Depreciation and amortization                         0             0
    Selling, general and administrative              11,168        32,678 

                                                    230,801       150,512 

  Loss From Art Operations                         (126,401)      (48,762)

  General and administrative expense               (328,640)     (298,944)

  Write-off due to lease termination                      0             0 

  Income (loss) from operations                     389,433       258,794 


  Other income (Expense):

    Gain on sale of long-term investments                 0             0
    Loss on write-down of long-term 
      investments                                         0             0
    Interest and other income                         3,561         6,800
    Interest expense                               (397,058)     (327,630)

                                                   (393,497)     (320,830)

  Gain (Loss) Before Provision for Income
   Taxes and Extraordinary Gain                      (4,064)      (62,036)

  (Provision) Benefit for Income Taxes                    0             0 

  Net Income (Loss) Before Extraordinary
   Gain                                              (4,064)      (62,036)

  Extraordinary Gain on Retirement of Debt,
   (Net of taxes of $0)                                   0             0 






                                      6







                  CANAL CAPITAL CORPORATION & SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
        FOR THE THREE MONTHS ENDED JANUARY 31, 1996 AND 1995 (Cont d)


                                                   1996           1995
                                               (UNAUDITED)    (UNAUDITED)


  Net Income (Loss)                                  (4,064)     (62,036)

  Preferred Stock Dividend                          (38,341)     (68,478)

  Net Income (Loss) Applicable to Common 
   Shares                                      $    (42,405)  $ (130,514)




  Per Common Share Amounts:

    Gain (Loss) from operations                $      (0.01)  $    (0.03)
    Extraordinary gain on retirement
     of debt                                           0.00         0.00 

  Net Income (Loss) Per Common Share           $      (0.01)  $    (0.03) 


                                                  

                                               





















                                      7






                  CANAL CAPITAL CORPORATION & SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
            FOR THE THREE MONTHS ENDED JANUARY 31, 1996 AND 1995



                                                   1996          1995
                                               (UNAUDITED)    (UNAUDITED)

  Cash Flows from Operating Activities:

   Net income (loss)                           $    (4,064)   $   (62,036)

  Adjustments to Reconcile Net Loss to
   Net Cash Provided (Used) by Operating
   Activities:

    Write-off in connection with lease
     termination                                         0              0
    Provision for litigation settlement                  0              0
    Extraordinary gain on retirement of 
     debt                                                0              0
    Depreciation and amortization                  110,175         96,076
    Gain on sale of real estate                   (316,888)       (24,467)
    Deferred tax provision                               0              0
    Loss on write-down of long-term 
     investments                                         0              0
    Gain from sale of long-term investments              0              0
    Valuation reserve-art inventory                      0              0


  Changes in Assets and Liabilities:  

    Receivables, net                               (74,277)        71,842
    Art inventory, net                             206,664        114,804
    Prepaid expenses and other, net               (226,458)        27,255
    Payables and accrued expenses, net             (61,295)       (61,043)

    Net Cash Provided (Used) by Operating
      Activities                                  (366,143)       162,431 











                                      8





                  CANAL CAPITAL CORPORATION & SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
        FOR THE THREE MONTHS ENDED JANUARY 31, 1996 AND 1995 (Cont d)



                                                   1996           1995
                                               (UNAUDITED)    (UNAUDITED)
                                               
  Cash Flows from Investing Activities:

    Proceeds from sale of long-term 
     investments                                         0              0
    Proceeds from sales of real estate             476,621         49,345
    Capital expenditures                                 0        (20,485)

  Net Cash Provided (Used) in Investing
   Activities                                      476,621         28,860 



  Cash Flows from Financing Activities:

   Proceeds from the issuance of long-term 
    debt                                       $         0    $         0
   Proceeds (repayment) of short-term
    borrowings                                           0       (135,000)
   Repayment of long-term debt obligations        (236,425)      (138,330)

  Net Cash Used by Financing Activities           (236,425)      (273,330)


  Net Increase (Decrease) in Cash                 (125,947)       (82,039)
  Cash and Cash Equivalents at Beginning of
   Period                                          114,750         33,595 


  Cash and Cash Equivalents at End of Period   $   (11,197)   $   (48,444)




  Note: Canal made federal and state income tax payments of $21,000 and
  $19,000, and interest payments of $397,000 and $328,000 in the three
  month periods ended January 31, 1996 and 1995, respectively.







                                     9 




                 CANAL CAPITAL CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF STOCKHOLDERS  EQUITY
              FOR THE YEAR ENDED OCTOBER 31, 1995 (AUDITED) AND
           FOR THE THREE MONTHS ENDED JANUARY 31, 1996 (UNAUDITED)


                               Common Stock         Preferred Stock  
                                Number               Number
                                of                   of
                                Shares     Amount    Shares   Amount 

  Balance, Oct. 31, 1994        5,313,794  $53,138  2,055,194 $20,552
  Net Income (Loss)                     0        0          0       0
  Preferred Stock Dividen               0        0    303,348   3,033
  Reserve                               0        0          0       0
                                                                 
  Balance, Oct. 31, 1995        5,313,794    53,138 2,358,542   23,585
  Net Income (Loss)                     0         0         0        0
  Preferred Stock Dividend              0         0    76,456      765
  Reserve                               0         0         0        0

  Balance, January 31, 1996     5,313,794   $53,138 2,434,998  $24,350




                                       Retained                  Treasury
                            Paid-in    Earnings     Valuation     Stock
                            Capital    (Deficit)     Reserve      At Cost 


  Balance,Oct.31,1994  $26,262,346 ($7,979,331) ($1,408,743) ($11,003,545)
  Net Income(Loss)               0  (1,518,214)           0             0
  Preferred StockDividend  205,662    (193,148)           0             0
  Reserve                        0           0     (327,928)            0 

  Balance,Oct.31,1995   26,468,008  (9,690,693)  (1,736,671)  (11,003,545)
  Net Income (Loss)              0      (4,064)           0             0
  Preferred Stock Dividend  37,463     (38,341)           0             0
  Reserve                        0           0            0             0

  Balance,Jan.31,1996  $26,505,471 ($9,733,098) ($1,736,671) $(11,003,545)






                                     10




                 CANAL CAPITAL CORPORATION AND SUBSIDIARIES
               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                     THREE MONTHS ENDED JANUARY 31, 1996
                                 (UNAUDITED)


  1.   GENERAL

  Canal  Capital  Corporation  (  Canal  ),  incorporated  in the state of
  Delaware in 1964, commenced business operations through a predecessor in
  1936.  Canal was a wholly owned subsidiary of Canal-Randolph Corporation
  until  June  1, 1984, when Canal-Randolph Corporation distributed to its
  stockholders  all  of  the  outstanding  shares of Canal s common stock,
  under a plan of complete liquidation.

  Canal is engaged in two distinct businesses - the management and further
  development  of  its agribusiness related real estate properties and art
  operations,  consisting mainly of the acquisition of art for resale.  In
  the  past  Canal  engaged in the trading of and investing in securities.
  Canal  s  trading  activities were severely curtailed in fiscal 1991 and
  not engaged in at all in fiscal years 1992 through 1996.

  While  the  Company  is  currently operating as a going concern, certain
  significant  factors raise substantial doubt about the Company s ability
  to  continue  as  a  going  concern.    First,  the Company has suffered
  significant  losses  from  operations  in  six  of the last seven years.
  Second,  the  Company  is  involved  in litigation with major tenants in
  Sioux  City,  Iowa and Fargo, North Dakota. Third, and last, the Company
  has  a continuing environmental liability associated with a 1988 sale of
  property  located in Portland, Oregon.  The financial statements include
  a  reserve  of $400,000 associated with the environmental liability, but
  does  not  include any adjustments that might result from the resolution
  of these other uncertainties.

  I n    the  past  three  years,  Canal  has  made  significant  cuts  in
  expenditures,  primarily  in  salaries  and  other overhead expenses and
  plans  to continue to reduce the level of its art inventories to enhance
  current cash flows.

  Management  believes that its cost cutting program and planned reduction
  of  its  art  inventory  will  enable it to finance its current business
  activities.  There can, however, be no assurance that Canal will be able
  to  effectuate  its  planned  art  inventory reductions or that its cost
  cutting  program  in  itself  will  be sufficient to fund operating cash
  requirements.





                                     11









  2.  Interim Financial Statements

  The  interim consolidated financial statements included herein have been
  prepared  by  Canal  without  audit.   In the opinion of Management, the
  accompanying   unaudited  financial  statements  of  Canal  contain  all
  adjustments  necessary  to  present  fairly its financial position as of
  January  31,  1996  and the results of its operations and its cash flows
  for  the  three  month  period ended January 31, 1996.  All of the above
  referenced  adjustments  were  of  a  normal  recurring nature.  Certain
  information  and  footnote  disclosures  normally  included in financial
  statements  prepared  in  accordance  with generally accepted accounting
  principles  have  been condensed or omitted.  These financial statements
  should be read in conjunction with the consolidated financial statements
  for  the  three years ended October 31, 1995 and the notes thereto which
  are  contained  in Canal s 1995 Annual Report on Form 10-K.  The results
  of  operations for the period presented is not necessarily indicative of
  the results to be expected for the remainder of fiscal 1996.


  3.  Reclassification

  Certain  amounts have been reclassified to conform to the current year s
  presentation.


  4.  Notes Receivable

  Included  in  the  notes  and  accounts  receivable were notes from real
  estate  sales  in the amount of $150,000 at January 31, 1996 and October
  31, 1995.



  5.  LONG TERM INVESTMENTS

  At January 31, 1996, the long-term investments consisted of the         
     following:

      (Thousands of Dollars)       January 31, 1996     October 31, 1995

      Aggregate market value..........   $ 395                $ 481

      Aggregate carrying value........   $ 480                $ 480

      Canal has investments in the equity securities of a company in which
  other  entities  affiliated  with  Canal also have made investments, and
  which 




                                     12



  entities  together  comprise  a group for regulatory reporting purposes.
  It  is  important  to  note  that  it is the group (as defined) that can
  exercise  influence  over  the  company,  not  Canal.  Accordingly, this
  situation does not qualify for consolidation as a method of reporting.  
  At  July  31,  1995,  100%  of  the  market  value  of Canal s long-term
  investments  was  invested  in  equity  securities of this company.  The
  group  held  5%  or  more  of  the outstanding equity securities of this
  issuer.    Certain  of  Canal  s  officers  and  directors also serve as
  officers and/or directors of this company.



  6.  ART OPERATIONS

      Canal s art dealing operations consist primarily of the purchase for
  resale  of  contemporary  art  and  purchase  for  resale of antiquities
  primarily  from  ancient  Mediterranean  cultures.   Canal s art dealing
  operations   are  carried  on  through  various  consignment  agreements
  relating to its antiquities and contemporary art inventories.

      Management estimates it may take two to five years to dispose of its
  current  art  inventory.    The  Company s ability to dispose of its art
  inventory is dependent at least in part, on general economic conditions,
  i n c luding  supply,  demand,  international  monetary  conditions  and
  inflation.    Additionally,  the  art market itself is very competitive.
  Accordingly,  there can be no assurance that Canal will be successful in
  disposing of its art inventory within the time frame discussed above. 

        Canal  has its art inventory appraised by an independent appraiser
  annually.  The 1995 appraisal covered approximately 78% of the inventory
  value.    The appraised values estimate the current market value of each
  piece   giving  consideration  to  Canal  s  practices  of  engaging  in
  consignment, private and public auction sales.  The net realizable value
  of  the remaining 22% of the inventory was estimated by management based
  in  part  on  operating  history  and  in  part  on  the  results of the
  independent  appraisals done. In fiscal 1995 Canal recognized a $500,000
  valuation  allowance  against its art inventory, thereby, increasing the
  total  valuation  allowance  to  $1,000,000  as  of  October 31, 1995 as
  compared  to  $500,000  and  $300,000  at  October  31,  1994  and 1993,
  respectively.    These  estimates  were  based  in part on the Company s
  history  of  losses  sustained  on art sales in the current and previous
  years.

        The  nature  of  art makes it difficult to determine a replacement
  value.    The  most  compelling  evidence of a value in most cases is an
  independent  appraisal.    The  price  at  which pieces are consigned is
  usually  in  line  with appraisals and above the cost of the piece.  The
  amount classified as current 









                                     13



  represents  management  s best estimate  of the amount of inventory that
  will  be  sold  in  this market.  Management believes that the provision
  discussed  above  has effectively reduced inventory to its estimated net
  realizable value.

     The Company s plan to sell inventory at auction is contemplated in
  the normal course of business.  Auction in this context is one of the
  usual channels used for disposal of its art inventory.  The proceeds
  from these sales will be used to reduce the Company s outstanding debt. 
  If these sales are not made, the Company has alternate means of raising
  cash such as sales of investments, sale of real estate, raising of new
  capital and rescheduling of debt.  Because of the alternatives in
  raising cash to meet its debt requirements available to the Company, it
  does not anticipate any extraordinary losses associated with the sale of
  its art inventory in fiscal 1996. 


        Canal s art operations have generated operating losses of $126,000
  and  $49,000  on  revenues of $104,000 and $102,000 for the three months
  ended  January 31, 1996 and 1995, respectively.  Art sales have resulted
  primarily  through  activities in conjunction with sales of antiquities.
  Canal  s  management  believes  that  through  its consignment and joint
  venture agreements as well as other potential distribution outlets Canal
  will continue to deal in antiquities and contemporary art.


     Inventory on Consignment - The Company had $809,000 and $1,600,000 of
  art  inventory  on  consignment  with third party dealers at January 31,
  1996  and  October 31, 1995, respectively.  Antiquities and contemporary
  art  represented  52%  ($2,717,000) and 48% ($2,477,000), as compared to
  54%  ($2,923,000) and 46% ($2,477,000) of total art inventory at January
  31, 1996 and October 31, 1995, respectively.



  7.  Property and Equipment

  Included  in  buildings  and  equipment  were  the  cost of buildings of
  approximately $5 million at January 31, 1996 and October 31, 1995.












                                     14







  8.  VALUATION RESERVE

  The  Valuation  Reserve  represents the excess of the additional minimum
  pension liability required under the provisions of SFAS No. 87 over the
  unrecognized  prior  service  costs of former stockyard employees.  Such
  excess  arose  due  to the decline in the market value of pension assets
  available  for  the  pension  benefits  of  the  former employees, which
  benefits  were  frozen at the time the stockyard operations were sold in
  1989.    The  excess will effectively be expensed over time as actuarial
  computations  of  annual pension  cost (made in accordance with SFAS No.
  87) recognize the deficiency that exists.

  9.   BORROWINGS

  At  January  31, 1996, substantially all of Canal s real properties, the
  s t ock  of  certain  subsidiaries,  the  long-term  investments  and  a
  substantial  portion of its art inventories are pledged as collateral to
  secure the following obligations:
                                            January 31,      October 31,
                                                1996            1995    
                                            (Unaudited)        (Audited)
  (Thousands of Dollars)
  Variable rate mortgage notes due
   May 15, 1998.............................   $ 7,555         $ 7,635
  Variable rate mortgage notes due
   September 15, 1998.......................       888           1,032
  11% mortgage note; original principal
   amount $1,697; due April 1, 2011;
   payable in monthly installments
   (including interest) of $17..............     1,348           1,356
  9.5% mortgage note; original principal
   amount $472; due November 1, 2012,
   payable in monthly installments
   (including interest) of $4...............       414             416
  10 1/2% mortgage note (adjusted
   periodically to prime plus 1 3/4%);
   original principal amount $556 due
   January 15, 2013; payable in monthly
   installments (including interest) of $6..       489             491

  Other ....................................       500             500

  Total ....................................    11,194          11,430 

  Less -- current maturities ...............       551              51

  Long-term debt ...........................   $10,643         $11,379





                                     15


       On May 22, 1985, Canal completed the sale of $20 million face value
  of  Variable  Rate  Mortgage Notes, due May 15, 1993.  As discussed more
  fully  below,  Canal  has  extended  these  notes  to May 15, 1998 under
  essentially  the same terms and conditions.  The notes carry interest at
  the highest of four variable rates, determined on a quarterly basis.

      The new agreement, among other things, prohibits Canal from becoming
  an  investment company as defined by the Investment Company Act of 1940;
  requires  Canal to maintain minimum net worth; restricts Canal s ability
  t o    pay  cash  dividends  or  repurchase  stock;  requires  principal
  prepayments to be made only out of the proceeds from the sale of certain
  assets;  and  requires the accrual of additional interest (to be paid at
  maturity)  of two, three and four percent per annum for the fiscal years
  commencing  May 15, 1995, 1996 and 1997, respectively.  In consideration
  for  the  new agreement, Canal agreed to pay a fee to the noteholders of
  2% of the principal amount outstanding as of May 15, 1995.

     On September 20, 1995, the Company issued $1,032,000 of variable rate
  mortgage  notes  due  September  15,  1998  to a group which includes an
  investment  partnership  controlled  by  the  Company s Chairman and the
  Company  s Chief Executive Officer and members of his family.  The notes
  issued  have  essentially  the  same  terms  and conditions as the notes
  discussed  above.  These notes, among other things, prohibits Canal from
  becoming  an investment company as defined by the Investment Company Act
  of 1940; requires Canal to maintain minimum net worth; restricts Canal s
  ability  to  pay  cash dividends or repurchase stock; requires principal
  prepayments to be made only out of the proceeds from the sale of certain
  assets,  and  requires the accrual of additional interest (to be paid at
  maturity)  of  two, three or four percent per annum for the fiscal years
  commencing September 15, 1995, 1996 and 1997, respectively.

      In March 1994 the Company borrowed $500,000 from an individual.  The
  Company  executed  a  $350,000 note due December 31, 1996 and a $150,000
  convertible  note  also  due  December  31,  1996.  The $150,000 note is
  convertible  at  the holder s option into one million (1,000,000) shares
  of  the Company s common stock.  The notes pay quarterly interest at the
  rate  of  7%  per  annum  and are secured by 125,000 shares of Datapoint
  Corporation  common  stock owned by the Company.  The proceeds from this
  loan  were used by the Company to meet its obligations under its secured
  credit  line.  At January 31, 1996, this note is classified as a current
  liability.







                                     16







                    Management s Discussion and Analysis
              Of Results of Operations and Financial Condition
                 For the Three Months Ended January 31, 1996


  Results of Operations - General

  While  the  Company  is  currently operating as a going concern, certain
  significant  factors raise substantial doubt about the Company s ability
  to  continue  as  a  going  concern.    First,  the Company has suffered
  significant  losses  from  operations  in  six  of the last seven years.
  Second,  the  Company  is  involved  in litigation with major tenants in
  Sioux  City,  Iowa and Fargo, North Dakota. Third, and last, the Company
  has  a continuing environmental liability associated with a 1988 sale of
  property  located in Portland, Oregon.  The financial statements include
  a  reserve  of $400,000 associated with the environmental liability, but
  does  not  include any adjustments that might result from the resolution
  of these other uncertainties.

  Canal s revenues from continuing operations consist of revenues from its
  real  estate  and art operations.  Revenues increased by $414,000 or 36%
  to  $1,557,000  for  the  three month periods ended January 31, 1996 and
  1995,  respectively.   The 1996 increase is due primarily to an increase
  in  the  sale  of real estate during the first quarter of fiscal 1996 of
  $477,000 as compared to $49,000 for the same period in fiscal 1995.

  1996 vs. 1995

  Canal  s  operations generated a net loss of $4,000 as compared to a net
  loss  of  $62,000 for the three month periods ended January 31, 1996 and
  1995, respectively.  Included in the 1996 results are a gain on the sale
  of  real  estate  of  $317,000 which was offset to a certain extent by a
  $126,000  loss  from  art  operations and a $69,000 increase in interest
  expense  due  to  the  increased  rates  being  charged  to Canal on its
  outstanding debt.


  Real Estate Operations

  Canal  s  real  estate  properties  located  in  six  Midwest states are
  primarily  associated  with  its former agribusiness related operations.
  Each  property  is adjacent to a stockyard operations (which operates on
  land  leased  from  the  Company)  and  consists of an Exchange Building
  (commercial  office  space), land and structures leased to third parties
  (meat  packing  facilities,  rail  car repair shops, truck stops, lumber
  yards  and  various  other  commercial and retail businesses) as well as
  vacant land available for development or resale.  In connection with the
  1989  sale  of  its  stockyards  operations, Canal entered into a master
  lease (the  Lease ) with the purchaser covering 





                                     17





  approximately  139  acres  of  land  and  certain facilities used by the
  stockyards  operations.   The Lease is a ten year lease renewable at the
  purchaser  s  option  for an additional ten year period, with escalating
  annual rentals.  In addition, Canal retained the right to receive income
  from  certain  volume  based  rental income leases with two meat packing
  companies located near the stockyards.


  Real Estate Revenues

  Canal  s  principal  real estate operating revenues are derived from the
  Lease,  income  from  the  volume  based rental leases with meat packing
  companies  located  near  the  stockyards,  rental  income from its five
  Exchange  Building,  lease  income  from  land  and structures leased to
  various  commercial and retail enterprises and proceeds from the sale of
  real  estate  properties.  Additionally, Canal has continued its program
  of developing what was excess stockyard property.

  Real  estate  revenues  for  the  three months ended January 31, 1996 of
  $1,453,000  accounted  for  93.3%  of  the  1996 revenues as compared to
  revenues  of  $1,041,000  or  91.1%  for  the same period in 1995.  Real
  estate  revenues  are  comprised of rental income from Exchange Building
  rentals  and  other  lease  income  from  the  rental of vacant land and
  certain  structures  (36.9%  and  49.3%), ground lease income (16.1% and
  23.8%),  volume  based  rental income (14.0% and 21.5%) and sale of real
  estate  and other income (33.0% and 5.4%) for the 1996 and 1995 periods,
  respectively.

                                      

  Real Estate Expenses

  Real  estate  expenses  for  the  three months ended January 31, 1996 of
  $608,000 increased by $173,000 (39.8%) from $435,000 for the same period
  in  1995.    Real  estate expenses are comprised of labor, operating and
  maintenance  (39.3% and 46.0%), depreciation and amortization (15.0% and
  20.9%)  taxes  other  than  income taxes (14.8% and 22.1%), cost of real
  estate  sold  (26.3%  and  5.7%) and general and administrative expenses
  (4.6%  and  5.3%) for the 1996 and 1995 periods, respectively.  The 1996
  increase  is  due  primarily  to a $135,000 increase in the cost of real
  estate  sold associated with the increase in real estate sales discussed
  above.










                                     18




  Art Operations

      Management estimates it may take two to five years to dispose of its
  current  art  inventory.    The  Company s ability to dispose of its art
  inventory is dependent at least in part, on general economic conditions,
  i n c luding  supply,  demand,  international  monetary  conditions  and
  inflation.    Additionally,  the art market itself is a very competitive
  market.    Accordingly,  there  can  be  no assurance that Canal will be
  successful  in  disposing  of  its  art  inventory within the time frame
  discussed above. 

                                                                          
         Canal has its art inventory appraised by an independent appraiser
  annually.    The  fiscal 1995 appraisal covered approximately 78% of the
  inventory value.  The appraised values estimate the current market value
  of  each  piece giving consideration to Canal s practices of engaging in
  consignment, private and public auction sales.  The net realizable value
  of  the remaining 22% of the inventory was estimated by management based
  in  part  on  operating  history  and  in  part  on  the  results of the
  independent appraisals done.  In fiscal 1995 Canal recognized a $500,000
  valuation  allowance  against its art inventory, thereby, increasing the
  total  value  allowance to $1,000,000 as of October 31, 1995 compared to
  $500,000 and $300,000 at October 31, 1994 and 1993, respectively.  These
  estimates are based in part on the Company s history of losses sustained
  on art sales in the current and previous years.

   
          The valuation allowance represents management s best estimate of
  the  loss  that  will be incurred by the Company in the normal course of
  business.     The  estimate  is  predicated  on  past  history  and  the
  information that was available at the time that the financial statements
  were prepared.  The provision contemplates the loss that could result if
  the level of sale anticipated was achieved. 


           The nature of art makes it difficult to determine a replacement
  value.    The  most  compelling  evidence of a value in most cases is an
  independent  appraisal.    The  price  at  which pieces are consigned is
  usually  in  line  with appraisals and above the cost of the piece.  The
  amount  classified  as  current represents management s best estimate of
  the  amount  of  inventory that will be sold in this market.  Management
  believes  that  the  provision  discussed  above has effectively reduced
  inventory  to  its  estimated  net  realizable  value.  The Company will
  continually monitor the market for its product and will make adjustments
  to the value of its art inventory as such adjustments become necessary.

        The Company s plan to sell inventory at auction is contemplated in
  the  normal  course  of business.  Auction in this context is one of the
  usual  channels  used  by the Company for disposal of its art inventory.
  The proceeds 



                                     19




  from  these  sales will go to reduce the Company s outstanding debt.  If
  these sales are not made the Company has alternate means of raising cash
  such  as  sales  of  investments,  sale  of  real estate, raising of new
  c a p i tal  and  rescheduling  of  debt.    Because  of  the  available
  alternatives,  the  Company does not anticipate any extraordinary losses
  associated with a forced sale of its art inventory in fiscal 1996.


  Art Revenues

  Art  revenues  of  $104,000  for the three months ended January 31, 1996
  represented  a modest increase (2.6%) over the same period in 1995.  Art
  revenues  are  comprised  of  proceeds  from the sale of antiquities and
  contemporary art (100.0% and 100.0%) and commission on sale of art owned
  by  third  parties  (0.0%  and  0.0%)  for  the  1996  and 1995 periods,
  respectively.


  Art Expenses

  Art  expenses  for  the  three months ended January 31, 1996 of $231,000
  increased  by $80,000 (53.3%) from $151,000 for the same period in 1995.
  The  1996  increase  is  due  primarily to the continued softness of the
  current  art market resulting in lower prices for goods sold at auction.
  Art  expenses  consisted  of  cost  of  art  sold  (95.2% and 78.3%) and
  selling,  general  and  administrative expenses (4.8% and 21.7%) for the
  1996 and 1995 periods,  respectively.



  General and Administrative

  General  and  administrative expenses for the three months ended January
  31,  1996  of $329,000 increased somewhat from the $299,000 for the same
  period  in  1995.    The  major components of general and administrative
  expenses  are officers salaries (32.8% and 32.8%), rent (8.9% and 9.3%),
  legal  and  professional  fees  (9.6%  and  19.0%), insurance (10.7% and
  11.5%)  and  office  salaries  (10.3%  and  10.1%) for the 1996 and 1995
  periods, respectively.


  Interest Expense

  Interest expense for the three months ended January 31, 1996 of $397,000
  increased  by $69,000 (21.2%) from $328,000 for the same period in 1995.
  This  reflects the rising average interest rates charged to Canal by its
  lenders  offset to a certain extent by reductions in the average balance
  of long-term debt outstanding.



                                     20



  Inflation

  With  the  sale of its stockyard operations, Canal s operations are less
  subject to inflation than previously.  Its chief area of exposure is now
  the impact inflation brings to interest rates since most of Canal s debt
  agreements carry variable interest rates.


  Capital Resources and Liquidity

  While  the  Company  is  currently operating as a going concern, certain
  significant  factors raise substantial doubt about the Company s ability
  to  continue  as  a  going  concern.    First,  the Company has suffered
  significant  losses  from  operations  in  six  of the last seven years.
  Second,  the  Company  is  involved  in litigation with major tenants in
  Sioux  City,  Iowa and Fargo, North Dakota. Third, and last, the Company
  has  a continuing environmental liability associated with a 1988 sale of
  property  located in Portland, Oregon.  The financial statements include
  a  reserve  of $400,000 associated with the environmental liability, but
  does  not  include any adjustments that might result from the resolution
  of these other uncertainties.

  On  May 15, 1995 Canal renegotiated its variable rate mortgage note with
  the  two  remaining noteholders.  The new agreement, among other things,
  extends  the  maturity  date  by  two  years  to  May 15, 1998, requires
  prepayments to be made only out of the proceeds from the sale of assets,
  requires  the accrual of additional interest (to be paid at maturity) of
  two,  three  and  four percent per annum for the fiscal years commencing
  May 15, 1995, 1996 and 1997, respectively, prohibits Canal from becoming
  an  investment company as defined by the Investment Company Act of 1940;
  requires Canal to maintain 
  minimum  net  worth;  restricts Canal s ability to pay cash dividends or
  repurchase  stock.  In consideration for the new agreement, Canal paid a
  fee  to  the noteholders of 2% of the principal amount outstanding as of
  May 15, 1995. 

  On  September  20,  1995, the Company issued $1,032,000 of variable rate
  mortgage  notes  due September 15, 1998, the proceeds of which were used
  to  repay  in full the Company s secured credit line and a $650,000 note
  the  Company  issued in 1993.  The purchasers of these notes included an
  investment  partnership  controlled  by  the  Company s Chairman and the
  Company  s Chief Executive Officer and members of his family.  The notes
  issued  have  essentially  the  same  terms  and conditions as the notes
  discussed  above.  These notes, among other things, prohibits Canal from
  becoming  an investment company as defined by the Investment Company Act
  of 1940; requires Canal to maintain minimum net worth; restricts Canal s
  ability  to  pay  cash dividends or repurchase stock; requires principal
  prepayments to be made only out of 






                                     21




  the  proceeds  from the sale of certain assets, and requires the accrual
  of  additional  interest  (to be paid at maturity) of two, three or four
  percent  per  annum  for the fiscal years commencing September 15, 1995,
  1996 and 1997, respectively.

  Net  cash  generated  by  operations in the first three months of fiscal
  1996  was  a  negative $366,000.  Cash and cash equivalents increased by
  $37,000  in  1996.    Substantially all of the proceeds from the sale of
  real  estate  of  $477,000  and  the  reduction  of the art inventory of
  $207,000 was used to reduce accrued expenses and outstanding debt.

  At  January  31, 1996 the Company s current liabilities exceeded current
  assets  by $2.0 million as compared to $1.7 million at October 31, 1995.
  The increase is due primarily to the reclassification of a $500,000 note
  payable due December 31, 1996 to current liabilities.

  The  Company leases 139 acres of land (at five locations) to a stockyard
  operator.    This  lease  represents  approximately 25% of the Company s
  annual  revenues.    To  date, the stockyard operator has met all of its
  obligations under the lease.  Management does not anticipate any changes
  in this situation for the remainder of the lease.

  Management  believes  that  the  1996  cash flow from operations will be
  sufficient to support its ongoing operations.























                                     22



                                      


























                                   PART II

                              OTHER INFORMATION
























                                     23





  Item 1:        Legal Proceedings:

  See Item 3 of Canal s October 31, 1995 Form 10-K.

  Item 2 and 3:

  Not applicable.

  Item 4:        Submission of Matters to a Vote of Security Holders:

  None.

  Item 5:        Other Information:

  None.

  Item 6:        Exhibits and Reports on Form 8-K:

  (A) Not applicable.
  (b) No reports on Form 8-K have been filed during the quarter
                     for which the report is filed.

























                                     24




                                 SIGNATURES



  Pursuant  to the requirement of the Securities Exchange Act of 1934, the
  registrant had duly caused this report to be signed on its behalf by the
  undersigned thereunto duly authorized.




                                          Canal Capital Corporation
                                                Registrant




                                                                   
                                          Reginald Schauder
                                          Vice President-Finance &
                                          Chief Financial Officer




  Date: March 8, 1996





















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