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 April 30, 1998

                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 March 31, 1998
Common stock, $0.01 par value                4,326,929

(This document contains 25 pages)


                   CANAL CAPITAL CORPORATION & SUBSIDIARIES 
                         CONSOLIDATED BALANCE SHEETS  
                      APRIL 30, 1998 AND OCTOBER 31, 1997 
 
 
                                        APRIL 30,          OCTOBER 31,     
                                          1998                1997 
                                       (UNAUDITED)           (AUDITED)     
                        
ASSETS: 
 
CURRENT ASSETS: 
 CASH AND CASH EQUIVALENTS             $   (52,628)        $    28,225 
 NOTES AND ACCOUNTS RECEIVABLE             205,644             271,891 
 ART INVENTORY, NET OF A VALUATION ALLOWANCE OF
  $ 500,000  AT APRIL 30, 1998 AND 
  OCTOBER 31, 1997, RESPECTIVELY           500,000             500,000
 INVESTMENTS                               812,851           1,151,358 
 PREPAID EXPENSES                          171,888             199,888 
 
   TOTAL CURRENT ASSETS                  1,637,755           2,151,362 
 
 
 
 
NON-CURRENT ASSETS: 
 PROPERTY ON OPERATING LEASES, NET OF
  ACCUMULATED DEPRECIATION OF $ 2,529,687
  AND $ 2,407,533 AT APRIL 30, 1998 AND  
  OCTOBER 31, 1997, RESPECTIVELY         5,218,260           5,323,177 
 
 
ART INVENTORY NON-CURRENT, NET OF
 VALUATION ALLOWANCE OF $ 1,970,000
 AT APRIL 30, 1998 AND $2,350,000 AT   
 OCTOBER 31, 1997, RESPECTIVELY          1,930,608           2,310,857
            
 
  
 
 
OTHER ASSETS: 
 PROPERTY HELD FOR DEVELOPMENT OR RESALE 2,819,455           2,843,305 
 DEFERRED LEASING AND FINANCING COSTS       21,008              39,655 
 DEPOSITS AND OTHER                        178,150             291,787 
 
                                         3,018,613           3,174,747
 
                                       $11,805,236         $12,960,143 
                                      ============         =========== 
                                      






                                     2



                  CANAL CAPITAL CORPORATION & SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS  
                    APRIL 30, 1998 AND OCTOBER 31, 1997 
                                               
                                       APRIL 30,       OCTOBER 31,
                                         1998              1997
                                     (UNAUDITED)         (AUDITED)
LIABILITIES & STOCKHOLDERS' EQUITY: 
  
CURRENT LIABILITIES: 
 CURRENT PORTION OF LONG-TERM DEBT       98,000             98,000 
 ACCOUNTS PAYABLE AND ACCRUED EXPENSES1,758,588          1,871,963 
 INCOME TAXES PAYABLE                    82,313             97,995  
 
   TOTAL CURRENT LIABILITIES          1,938,901          2,067,958  
 
 
LONG-TERM DEBT, LESS CURRENT PORTION  2,325,294          2,375,496 
LONG-TERM DEBT, LESS CURRENT PORTION-
     RELATED PARTY                    3,456,000          3,675,000  
 
                                      5,781,294          6,050,496  
COMMITMENTS AND CONTINGENCIES                 

STOCKHOLDERS' EQUITY: 
 
 PREFERRED STOCK, $0.01 PAR VALUE: 
  5,000,000 SHARES AUTHORIZED; 3,019,400 AND 
  2,977,900 SHARES ISSUED AND OUTSTANDING 
  AT APRIL 30, 1998 AND OCTOBER 31, 1997,
  RESPECTIVELY AND AGGREGATE LIQUIDATION  
  PREFERENCE OF $ 30,194,000 AND $ 29,979,000  
  AT APRIL 30, 1998 AND OCTOBER 31, 1997
  RESPECTIVELY                            30,194              29,979 
 
 COMMON STOCK, $0.01 PAR VALUE: 
  10,000,000 SHARES AUTHORIZED; 5,313,794 
  SHARES ISSUED AND 4,326,929 SHARES OUTSTANDING  
  AT APRIL 30, 1998 AND OCTOBER 31, 1997,
  RESPECTIVELY                            53,138              53,138 
 
 PAID-IN CAPITAL                      26,932,829          26,826,293  

 RETAINED EARNINGS (DEFICIT)         (10,719,227)        (10,194,335) 
 
 986,865 SHARES OF COMMON STOCK 
  HELD IN TREASURY, AT COST          (11,003,545)        (11,003,545) 


 COMPREHENSIVE INCOME:
  VALUATION RESERVE                  (1,485,641)         (1,485,641) 
  UNREALIZED GAIN ON INVESTMENTS
  AVAILABLE FOR SALE                    277,293             615,800 

                                      4,085,041           4,841,689 
 
                                   $ 11,805,236        $ 12,960,143 
                                  =============       ============= 
                                    3   



                  CANAL CAPITAL CORPORATION & SUBSIDIARIES
        CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME
              FOR THE SIX MONTHS ENDED APRIL 30, 1998 AND 1997



                                                1998            1997       
                                             (UNAUDITED)     (UNAUDITED)   
  

REAL ESTATE OPERATIONS:
 REAL ESTATE REVENUES:
  SALE OF REAL ESTATE                    $   251,000     $ 2,262,000   
  RENTAL INCOME                              725,845         834,760       
  GROUND LEASE INCOME                        462,000         462,000       
  VOLUME BASED RENTAL INCOME                  65,491          52,409       
  OTHER INCOME                                 3,738           8,472     

                                           1,508,074       3,619,641    

 REAL ESTATE EXPENSES:
  COST OF REAL ESTATE SOLD                    60,071         796,131       
  LABOR, OPERATING AND MAINTENANCE           438,736         437,798       
  DEPRECIATION AND AMORTIZATION              111,319         184,446       
  TAXES OTHER THAN INCOME TAXES              100,800         149,400       
  GENERAL AND ADMINISTRATIVE                  45,512          53,657     

                                             756,438       1,621,432     

INCOME FROM REAL ESTATE OPERATIONS           751,636       1,998,209     


ART OPERATIONS:
 ART REVENUES:
  SALES                                      206,200          17,300       
  OTHER REVENUES                                   0           2,982     

                                             206,200          20,282       


 ART EXPENSES:
  COST OF ART SOLD                           761,453          26,558       
  VALUATION RESERVE                         (380,000)              0       
  SELLING, GENERAL AND ADMINISTRATIVE         20,114          20,491     
    
                                             401,567          47,049     


LOSS FROM ART OPERATIONS                    (195,367)        (26,767)    









                                     4


                    CANAL CAPITAL CORPORATION & SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME
                  FOR THE SIX MONTHS ENDED APRIL 30, 1998 AND 1997
                             Continued ...


                                                1998           1997        
                                            (UNAUDITED)     (UNAUDITED)    

GENERAL AND ADMINISTRATIVE EXPENSE       $  (563,029)     $  (619,754)    


INCOME (LOSS) FROM OPERATIONS                 (6,760)       1,351,688      

OTHER INCOME (EXPENSE):
 INTEREST & OTHER INCOME                         931           78,858      
 INTEREST EXPENSE                           (221,063)        (448,433)     
 INTEREST EXPENSE-RELATED PARTY             (202,000)         (77,000)    

                                            (422,132)        (446,575)     
                                            

GAIN (LOSS) BEFORE PROVISION FOR INCOME 
  TAXES                                     (428,892)         905,113      

PROVISION (BENEFIT) FOR INCOME TAXES               0                0     

NET INCOME (LOSS)                           (428,892)         905,113      


OTHER COMPREHENSIVE INCOME (LOSS):
 UNREALIZED LOSS ON INVESTMENTS 
 AVAILABLE FOR SALE                         (338,507)        (174,291)   


COMPREHENSIVE LOSS                        $  (767,399)     $   730,822    
                                          =============    ============    


NET INCOME (LOSS) PER COMMON SHARE        $     (0.20)     $      0.15    
                                          =============    ============    


















                                5          


                   CANAL CAPITAL CORPORATION & SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME
               FOR THE THREE MONTHS ENDED APRIL 30, 1998 AND 1997



                                            1998            1997           
                                         (UNAUDITED)     (UNAUDITED)       

REAL ESTATE OPERATIONS:
 REAL ESTATE REVENUES:
  SALE OF REAL ESTATE                    $   235,000     $ 1,983,000   
  RENTAL INCOME                              363,969         397,404       
  GROUND LEASE INCOME                        231,000         231,000       
  VOLUME BASED RENTAL INCOME                  30,761          21,974       
  OTHER INCOME                                 1,874           4,378     

                                             862,604       2,637,756    

 REAL ESTATE EXPENSES:
  COST OF REAL ESTATE SOLD                    53,226         676,059       
  LABOR, OPERATING AND MAINTENANCE           225,764         220,580       
  DEPRECIATION AND AMORTIZATION               55,712          92,401       
  TAXES OTHER THAN INCOME TAXES               50,400          74,700       
  GENERAL AND ADMINISTRATIVE                  23,002          25,963     

                                             408,104       1,089,703     


INCOME FROM REAL ESTATE OPERATIONS           454,500       1,548,053     


ART OPERATIONS:
 ART REVENUES:
  SALES                                       48,000           2,200       
  OTHER REVENUES                                   0               0     

                                              48,000           2,200       


 ART EXPENSES:
  COST OF ART SOLD                           202,289           2,200       
  VALUATION RESERVE                         (100,000)              0       
  SELLING, GENERAL AND ADMINISTRATIVE         10,147          10,541     
    
                                             112,436          12,741     


LOSS FROM ART OPERATIONS                     (64,436)        (10,541)    










                                     6


                 CANAL CAPITAL CORPORATION & SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME
            FOR THE THREE MONTHS ENDED APRIL 30, 1998 AND 1997
                          Continued ...


                                        1998           1997           
                                    (UNAUDITED)     (UNAUDITED)      

GENERAL AND ADMINISTRATIVE EXPENSE    $  (284,414)     $  (306,986)    


INCOME (LOSS) FROM OPERATIONS             105,650        1,230,526       

OTHER INCOME (EXPENSE):
 INTEREST & OTHER INCOME                      304            1,775         
 INTEREST EXPENSE                         (72,831)        (223,770)       
 INTEREST EXPENSE-RELATED PARTY          (136,000)         (36,000)    

                                         (208,527)        (257,995)        
                                         

GAIN (LOSS) BEFORE PROVISION FOR INCOME 
  TAXES                                  (102,877)         972,531       

PROVISION (BENEFIT) FOR INCOME TAXES            0                0     

NET INCOME (LOSS)                        (102,877)         972,531       



OTHER COMPREHENSIVE INCOME (LOSS):
  UNREALIZED LOSS ON INVESTMENTS 
  AVAILABLE FOR SALE                     (293,345)         (45,158)   



COMPREHENSIVE LOSS                    $  (396,222)     $   927,373    
                                     =============    ============    


NET INCOME (LOSS) PER COMMON SHARE    $     (0.10)     $      0.20    
                                     =============    ============    
















                                7          



                  CANAL CAPITAL CORPORATION & SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE SIX MONTHS ENDED APRIL 30, 1998 AND 1997




                                       1998              1997           
                                     (UNAUDITED)       (UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES:
  NET INCOME (LOSS)                   $ (428,892)     $   905,113     

  ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO
   NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
   PROVISION FOR LITIGATION SETTLEMENT         0          (75,000)      
   DEPRECIATION AND AMORTIZATION         122,872          195,555       
   GAIN  ON SALES OF REAL ESTATE        (190,929)      (1,465,869)       

CHANGES IN ASSETS AND LIABILITIES:
  NOTES AND ACCOUNTS RECEIVABLES, NET     66,247           99,399  
  ART INVENTORY, NET                     378,249           25,200        
  PREPAID EXPENSES AND OTHER, NET         61,725          (78,640)       
 PAYABLES AND ACCRUED EXPENSES, NET     (129,057)        (446,137)     
NET CASH (USED) PROVIDED 
    BY OPERATING ACTIVITIES             (119,785)        (840,379)


CASH FLOWS FROM INVESTING ACTIVITIES:
  PROCEEDS FROM SALES OF REAL ESTATE     251,000        2,262,000
  PROCEEDS FROM SALE OF INVESTMENTS            0                0        
  CAPITAL EXPENDITURES                   (17,866)         (35,567)   
NET CASH PROVIDED BY 
     INVESTING ACTIVITIES                233,134        2,226,433    



CASH FLOWS FROM FINANCING ACTIVITIES:
 PROCEEDS FROM LONG-TERM DEBT-RELATED
    PARTIES                               75,000                0        
 TRANSFERS TO LONG-TERM                        0          325,000 
 REPAYMENT OF LONG-TERM DEBT OBLIGATIONS(269,202)        (246,106) 
NET CASH USED BY FINANCING ACTIVITIES   (194,202)          78,894  

(INCREASE) IN RESTRICTED CASH AND
  CASH EQUIVALENTS                       (80,853)               0       
NET (DECREASE) INCREASE IN CASH AND CASH
  EQUIVALENTS                                  0        1,464,948     
CASH AND CASH EQUIVALENTS AT 
     BEGINNING OF YEAR                    28,225           10,632       

CASH AND CASH EQUIVALENTS AT 
     END OF YEAR                     $   (52,628)     $ 1,475,580        
                                     ============     ============

NOTE:    Canal  made  federal  and state income tax payments of $16,000 and
$12,000  and  interest  payments  of $423,000 and $525,000 in the six month
periods ended April 30, 1998 and 1997, respectively.
                                     8


          CANAL CAPITAL CORPORATION AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
          FOR THE YEAR ENDED OCTOBER 31, 1997 (AUDITED) AND 
          FOR THE SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)


                         COMMON STOCK         PREFERRED STOCK
                    NUMBER              NUMBER                   
                      OF                  OF                    PAID-IN
                    SHARES   AMOUNT     SHARES       AMOUNT     CAPITAL

BAL.,OCT 31,1996 5,313,794   $53,138    2,703,299    $27,033  $26,636,939  
         
NET INCOME (LOSS)        0         0            0          0            0
PREFERRED STOCK DIV      0         0      294,601      2,946      189,354
MINIMUM PEN. LIAB. ADJ   0         0            0          0            0
UNREALIZED GAIN 
     ON INVESTMENTS      0         0            0          0            0  
                --------------------   ---------------------  ----------- 

BAL.,OCT 31,1997 5,313,794    53,138    2,997,900     29,979   26,826,293
NET INCOME (LOSS)        0         0            0          0            0  
PREFERRED STOCK DIV      0         0       21,500        215      106,536 
MINIMUM PEN. LIAB. ADJ   0         0            0          0            0 
UNREALIZED GAIN
      ON INVESTMENTS     0         0            0          0            0
                --------------------   ---------------------   ----------

BAL.,APR 30,1998 5,313,794   $53,138    3,019,400    $30,194  $26,932,829  
                ====================   ===================== ============ 




                  RETAINED    -COMPREHENSIVE (LOSS) INCOME-   TREASURY
                 EARNINGS       VALUATION    UNREALIZED       STOCK
                 DEFICIT         RESERVE     GAIN ON INV.    AT COST

BAL.,OCT31,1996  $9,010,999)    ($1,619,696)   $         0  ($11,003,545)
NET INCOME (LOSS)(1,001,483)              0              0             0   
PREFERRED STOCK DIV(181,853)              0              0             0
MINIMUM PEN. LIAB. ADJ.   0         134,055              0             0
 UNREALIZED GAIN ON INV.  0               0        615,800             0
               -------------  -------------   ------------  ------------

BAL.,OCT31,1997 (10,194,335)    ($1,485,641)       615,800   (11,003,545)
NET INCOME (LOSS)  (428,892)              0              0             0
PREFERRED STOCK DIV (96,000)              0              0             0
MINIMUM PEN. LIAB. ADJ.   0               0              0             0
UNREALIZED GAIN ON INV.   0               0       (338,507)            0
              -------------  --------------   ------------ ------------   

BAL.,APR30,1998($10,719,227)    ($1,485,641)   $   277,293  ($11,003,545)
              =============  ==============  ============= =============





                                     9


                 CANAL CAPITAL CORPORATION AND SUBSIDIARIES
               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      SIX MONTHS ENDED APRIL 30, 1998
                                (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 of its
agribusiness  related real estate properties located in the Midwest and art
operations, consisting mainly of the acquisition of art for resale.

     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.  The Company has suffered recurring losses
from  operations  in  seven  of  the  last  nine  years  and is involved in
litigation  with  a  major  tenant  in  Fargo, North Dakota.  The financial
statements  do  not  include  any  adjustments  that  might result from the
resolution  of  these  other  uncertainties. Additionally, the accompanying
financial  statements  do  not  include  any  adjustments  relating  to the
recoverability  and classification of recorded asset amounts or the amounts
and  classification  of  liabilities  that  might  be  necessary should the
Company be unable to continue as a going concern.

     Canal  continues  to  closely  monitor  and  reduce where possible its
overhead  expenses  and  plans  to  continue to reduce the level of its art
inventories  to  enhance  current cash flows.  Management believes that its
income  from  operations combined with 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
income  from  operations  combined  with its cost cutting program in itself
will be sufficient to fund operating cash requirements.



2.   Reclassification


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


                                     10




3.   Interim Financial Statements

     The  interim  consolidated  financial  statements included herein have


been  prepared  by  Canal without audit.  In the opinion of Management, the
a c c o mpanying  unaudited  financial  statements  of  Canal  contain  all
adjustments  necessary to present fairly its financial position as of April
30,  1998  and the results of its operations and its cash flows for the six
month period ended April 30, 1998.  All of the above referenced adjustments
were  of  a  normal  recurring  nature.    Certain information and footnote
d i s closures  normally  included  in  financial  statements  prepared  in
a c cordance  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, 1997 and the notes thereto which are contained in Canal s
1997  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 1998.


4.   Property and Equipment

     Included  in  property  and  equipment  were  the cost of buildings of
approximately $3 million at April 30, 1998 and October 31, 1997.


5.   Notes Receivable

     Included in the notes and accounts receivable were the current portion
of  notes from real estate sales in the amount of $25,000 at April 30, 1998
and October 31, 1997.


6.   INVESTMENTS AVAILABLE FOR SALE

     At  April 30, 1998 the investments available for sale consisted of the
following:


                                             April 30,      October 31,
     ($ 000's Omitted)                          1998             1997    
     
     Aggregate market value.................   $  813           $1,151

     Aggregate carrying value...............   $  813           $1,151



     Canal  has an investment in a company in which it, together with other
affiliated  entities,  comprise  a reporting group for regulatory purposes.
It  is  important    to  note  that it is the group  (as defined)  that can
exercise 


                                     11



influence  over this company, not Canal.  Accordingly, this investment does
not qualify for consolidation as a method of reporting.  Certain of Canal s
officers  and  directors  also  serve  as officers and/or directors of this
company.    This  investment  (in  which  Canal  s  ownership  interest  is
approximately  2%)  is  carried  at  market value and the realized gains or
losses,  if any, are recognized in operating results.  Any unrealized gains


or losses are reflected in Stockholders Equity.

     For the six months ended April 30, 1998 Canal recognized an unrealized
loss  on  investments  available  for  sale  of $339,000.  Additionally, in
fiscal  1997  Canal  recognized an unrealized gain on investments available
for  sale  of  $616,000, both of which are shown in a separate component of
Stockholders Equity. 


7.   ART OPERATIONS

     Canal  established  its  art operations in October 1988 by acquiring a
significant  inventory for resale of antiquities primarily from the ancient
Mediterranean   cultures.    In  November  1989,  Canal  expanded  its  art
operations by entering into a cost and revenue sharing agreement with a New
York  City  gallery  for  the  exclusive representation of Jules Olitski, a
world renowned artist of contemporary paintings.  As part of this agreement
Canal  purchased  a  number  of Olitski paintings which it holds for resale
with  a  book  value  of  approximately  $1,000,000 at April 30, 1998.  The
representation  agreement  expired  December 1, 1994 and Canal now operates
independently in the marketing of its contemporary art inventory.     

     Due  to  general  economic  conditions  and  the  softness  of the art
markets,  Canal  has  not  purchased  inventory in several years.  However,
Canal  continues  its  marketing efforts to sell its existing art inventory
through various consignment agreements and at public auctions.  Antiquities
and  contemporary art represented 54% ($1,195,345) and 46% ($1,035,263) and
63%  ($1,775,594)  and 37% ($1,035,263) of total art inventory at April 30,
1998  and  October  31,  1997,  respectively.    Substantially  all  of the
contemporary  art  inventory  held  for  resale is comprised of the work of
Jules Olitski.

       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,
including  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. The amount classified
as  current  represents  management  s  best  estimate    of  the amount of
inventory that will be sold in this market.

     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.    Canal  has  its  art  inventory  appraised  by an independent
appraiser 


                                     12



annually.  The 1997 appraisal covered approximately 49% 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 51% 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 1997 Canal recognized a $350,000 valuation allowance against
its  art  inventory,  thereby,  increasing the total valuation allowance to
$2,850,000  as of October 31, 1997 as compared to $2,500,000 and $1,000,000
at  October 31, 1996 and 1995, respectively.  These estimates were based in
part  on  the  Company  s  history  of losses sustained on art sales in the
current  and  previous  years.    Management  believes  that  the provision
discussed  above  has  effectively  reduced  inventory to its estimated net
realizable value.

     As   of  October  31,  1997  the  valuation  allowance  of  $2,850,000
represented  a  50%  reduction  in  the carrying value of the Company s art
inventory  which      management  believes  approximates its net realizable
value.    Accordingly,  the  Company  will, on a prospective basis, use the
adjusted  carrying value for sales, thereby, reducing the valuation reserve
(proportionately)  as  the  inventory  is  sold.  This policy resulted in a
reduction  in  the  valuation allowance of $380,000 on sales of art with an
historic cost of $761,000 in the first six months of fiscal 1998.

     Canal s art operations have generated operating losses of $195,000 and
$27,000  (net  of  a  fiscal  1998  decrease  in the valuation allowance of
$380,000)  on  revenues  of  $206,000  and $20,000 for the six months ended
April  30,  1998 and 1997, respectively.  It is the Company s policy to use
the  adjusted  carrying  value  for  sales,  thereby reducing the valuation
reserve  (proportionately)  as  the  inventory  is  sold.    Art sales have
resulted   primarily  through  activities  in  conjunction  with  sales  of
antiquities.    Canal  s  management  believes that through its consignment
agreements  as  well  as  other  potential  distribution outlets Canal will
continue to deal in antiquities and contemporary art.


     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.  Some of these measures were successfully implemented
in fiscal 1997.     

     Inventory  on  Consignment - The Company had $1,500,000 and $1,683,000
of  art inventory on consignment with third party dealers at April 30, 1998
and October 31, 1997, respectively. The price at which pieces are consigned
is usually in line with appraisals and above the cost of the piece.
                                      


                                     13



8. BORROWINGS

     At  April  30, 1998, substantially all of Canal s real properties, the
stock of certain subsidiaries, the investments and a substantial portion of
its  art  inventories  are  pledged  as  collateral to secure the following
obligations:

                                           April 30,       October 31,
                                              1998            1997    
                                          (Unaudited)        (Audited)


(Thousands of Dollars)

Variable rate mortgage notes due
 May 15, 2001 - related party............    $ 3,456         $     0

Variable rate mortgage notes due
 May 15, 1998.............................         0         $ 2,655

Variable rate mortgage notes due
 September 15, 1998 - related party.......         0             700

11% mortgage note; original principal
 amount $1,697; due April 1, 2011;
 payable in monthly installments
 (including interest) of $17..............     1,230           1,266

9.5% mortgage note; original principal
 amount $472; due November 1, 2012,
 payable in monthly installments
 (including interest) of $5...............       400             405

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..       471             477

Other Note - Related Party................         0             320

Other Note................................       322             325

Total ....................................     5,879           6,148 

Less -- current maturities ...............        98              98

Long-term debt ...........................   $ 5,781         $ 6,050






                                     14


     

     On  January  8,  1998,  the Company issued $3,700,000 of variable rate
mortgage  notes  due May 15, 2001, the proceeds of which were used to repay
in  full  the  Company  s  variable  rate  mortgage  notes due May 15, 1998
($2,605,000),  its  variable  rate  mortgage  notes  due September 15, 1998
($700,000)  and  two notes which were due December 31, 1997 ($320,000) plus
accrued  interest  thereon.  The purchasers of these notes included certain
entities  controlled  by  the  Company  s  Chairman,  the  Company  s Chief
Executive    Officer  and  members  of  their  families.  The variable rate
mortgage notes issued have essentially the same terms and conditions as the
variable rate mortgage notes which were repaid.  These notes carry interest
at  the  highest  of  four variable rates, determined on a quarterly basis.
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
approximately  three percent per annum.  As a result of the refinancing all
of  the  debt that was repaid on January 8, 1998 is classified as long term
debt-related  party.    At April 30, 1998 the balance due under these notes
was $3,456,000.



9.   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.


















                                   15  



                    Management s Discussion and Analysis
              Of Results of Operations and Financial Condition
                  For the Six Months Ended April 30, 1998

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.  The Company has suffered recurring losses
from  operations  in  seven  of  the  last  nine  years  and is involved in
litigation  with  a  major  tenant  in  Fargo, North Dakota.  The financial
statements  do  not  include  any  adjustments  that  might result from the
resolution  of  these  other uncertainties.  Additionally, the accompanying
financial  statements  do  not  include  any  adjustments  relating  to the
recoverability  and classification of recorded asset amounts or the amounts
and  classification  of  liabilities  that  might  be  necessary should the
Company be unable to continue as a going concern. 

     Canal  recognized  net losses of $429,000 and $103,000 for the six and
three  month  periods  ended  April  30,  1998 as compared to net income of
$905,000  and  $973,000  for the same periods in fiscal 1997, respectively.
After  recognition  of  unrealized  losses  on investments held for sale of
$339,000  and  $293,000 for the six and three month periods ended April 30,
1998  and  $174,000  and  $45,000  for  the  same  periods  in fiscal 1997,
respectively,  the  Company recognized comprehensive losses of $767,000 and
$396,000  for  the  six  and  three  month  periods ended April 30, 1998 as
compared comprehensive income of $731,000 and $927,000 for the same periods
in  fiscal  1997,  respectively.    Further, after recognition of preferred
stock  dividend payments of $96,000 and $48,000 for the six and three month
periods  ended  April 30, 1998 and $90,000 and $46,000 for the same periods
in  fiscal  1997, respectively, the Company recognized losses applicable to
common  stockholders  of  $863,000  ($0.20  per  common share) and $444,000
($0.10  per  common  share) for the six and three month periods ended April
30,  1998  as  compared  to    income  applicable to common stockholders of
$641,000 ($0.15 per common share) and $881,000 ($0.20 per common share) for
the  same  periods  in  fiscal  1997,  respectively.   Included in the 1998
results was the $339,000 unrealized loss on investments held for sale and a
$195,000 loss from art operations, while the 1997 results included gains on
t h e  sales  of  real  estate  of  $1,466,000,  other  income  of  $75,000
representing  a  reduction in the provision for litigation settlement and a
$174,000 unrealized loss on investments held for sale.      

     Canal  s  revenues from continuing operations consist of revenues from
its  real estate and art operations. Due to general economic conditions and
more  specifically  a  depressed  national  art  market,  Canal s aggregate
revenues  from  art  sales  and  the  prices  at which sales were made have
significantly declined in recent years. Revenues decreased by $1,926,000 or
52.9%  to $1,754,000 and by $1,729,000 or 65.5% to $911,000 for the six and
three month periods ended  April 30, 1998, respectively, as compared to the
revenues  for  the  same  periods in fiscal 1997.  The 1998 decrease is due
primarily  to  a  $2,011,000  decrease  in  revenues  from the sale of real
estate, offset to a certain extent by a $185,000 increase in art revenues.

                                     16



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.  The Company has suffered recurring losses
from  operations  in  seven  of  the  last  nine  years, and is involved in
litigation  with  a  major  tenant  in  Fargo, North Dakota.  The financial
statements  do  not  include  any  adjustments  that  might result from the
resolution  of  these  other uncertainties.  Additionally, the accompanying
financial  statements  do  not  include  any  adjustments  relating  to the
recoverability  and classification of recorded asset amounts or the amounts
and  classification  of  liabilities  that  might  be  necessary should the
Company be unable to continue as a going concern. 

     On  January  8,  1998,  the Company issued $3,700,000 of variable rate
mortgage  notes  due May 15, 2001, the proceeds of which were used to repay
in  full  the  Company  s  variable  rate  mortgage  notes due May 15, 1998
($2,605,000),  its  variable  rate  mortgage  notes  due September 15, 1998


($700,000)  and  two notes which were due December 31, 1997 ($320,000) plus
accrued  interest  thereon.  The purchasers of these notes included certain
entities  controlled  by  the  Company  s  Chairman,  the  Company  s Chief
Executive    Officer  and  members  of  their  families.  The variable rate
mortgage notes issued have essentially the same terms and conditions as the
variable rate mortgage notes which were repaid.  These notes carry interest
at  the  highest  of  four variable rates, determined on a quarterly basis.
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
approximately  three percent per annum.  As a result of the refinancing all
of  the  debt that was repaid on January 8, 1998 is classified as long term
debt-related  party.    At April 30, 1998 the balance due under these notes
was $3,456,000.  

     
     Cash  and  cash  equivalents  of  a negative $53,000 at April 30, 1998
decreased  $81,000  from  $28,000  at  October  31, 1997.  Net cash used by
operations  in fiscal 1998 was $120,000.  Substantially all of the 1998 net
proceeds from the sale of real estate and the proceeds from the sale of art
was used to reduce outstanding debt and accrued expenses.


     During  fiscal  1998 Canal reduced its variable rate mortgage notes by
$219,000  and other long-term debt by $50,000 for a net 1998 debt reduction
of $269,000. 






                                     17



     At  April  30, 1998 the Company s current liabilities exceeded current
assets  by  $0.3  million,  as compared to current assets exceeding current
liabilities  by  $0.1  million  at  October  31,  1997.   The only required
principal  repayments under Canal s debt agreements for fiscal 1998 will be
from  the proceeds of the sale of certain assets (if any) and approximately
$0.1 million on various fixed mortgages.


     Canal  continues  to  closely  monitor  and  reduce where possible its
overhead  expenses  and  plans  to  continue to reduce the level of its art
inventories  to  enhance  current cash flows.  Management believes that its
income  from  operations combined with 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
income  from  operations  combined  with its cost cutting program in itself
will be sufficient to fund operating cash requirements.



Real Estate Revenues


     Real  estate  revenues  for  the  six  months  ended April 30, 1998 of
$1,508,000  accounted for 88.0% of the year to date revenues as compared to
real  estate  revenues  of $3,620,000 or 99.4% for the same period in 1997.
Real  estate revenues are comprised of rental income from Exchange Building
(commercial office space) rentals and other lease income form the rental of
vacant  land  and certain structures (48.1% and 23.1%), ground lease income
(30.6%  and  12.8%), volume based rental income (4.3% and 1.4%) and sale of
real  estate  and  other  income (17.0% and 62.7%) for the six months ended
April  30,  1998  and 1997, respectively.  The 1998 revenue decrease is due
primarily to a $2,011,000 decrease in revenues from the sale of real estate
and  a  reduction  in  rental  income  of $109,000.  The decrease in rental
income  is  due  to  the December 1996 loss of the largest tenant (State of
Minnesota)  in  Canal s South St. Paul, Minnesota Exchange Building as well
as  the  continued  consolidation of other stockyards related tenants.  The
changes in percentages in the year to year comparisons are due primarily to
the significant decrease in real estate sales for fiscal 1998.

     Real  estate  revenues  for  the  three months ended April 30, 1998 of
$863,000  accounted for 94.7% of the second quarter revenues as compared to
real  estate  revenues  of $2,638,000 or 99.9% for the same period in 1997.
Real  estate revenues are comprised of rental income from Exchange Building
(commercial office space) rentals and other lease income from the rental of
vacant  land  and certain structures (42.2% and 15.1%), ground lease income
(26.8%  and  8.8%),  volume based rental income (3.6% and 0.8%) and sale of
real  estate  and other income (27.4% and 75.3%) for the three months ended
April  30,  1998  and  1997, respectively. The percentage variations in the
year  to  year comparisons are due primarily to the decrease in real estate
sales for fiscal 1998.


                                     18




Real Estate Expenses

     Real  estate  expenses  for  the  six  months  ended April 30, 1998 of
$756,000  decreased by $865,000 (53.3%) from $1,621,000 for the same period
in  1997.    Real  estate  expenses  were comprised of labor, operating and
maintenance  (58.0%  and  27.0%),  depreciation and amortization (14.7% and
11.4%), taxes other than income taxes (13.3% and 9.2%), cost of real estate
sold  (7.9%  and  49.1%)  and general and administrative expenses (6.1% and
3.3%)  for the six months ended April 30, 1998 and 1997, respectively.  The
1998  decrease  in  real  estate  expenses is due primarily to the $236,000
decrease  in cost of real estate sales.   The percentage variations in year
to  year  comparison  is  also due primarily to the decrease in the cost of
real estate sold for fiscal 1998. 

     Real  estate  expenses  for  the  three months ended April 30, 1998 of
$408,000  decreased by $682,000 (62.5%) from $1,090,000 for the same period
in  1997.    Real  estate  expenses  were comprised of labor, operating and
maintenance  (55.3%  and  20.2%),  depreciation and amortization (13.7% and
8.5%),  taxes other than income taxes (12.4% and 6.9%), cost of real estate
sold  (13.0%  and  62.0%) and general and administrative expenses (5.6% and
2.4%) for the three months ended April 30, 1998 and 1997, respectively. The
percentage  variations  in  year  to  year  comparisons are also due to the
decrease in the cost of real estate sold for fiscal 1998.


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,
including  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. The
amount  classified  as current represents management s best estimate of the
amount of inventory that will be sold in this market. 

     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.    Canal  has  its  art  inventory  appraised  by an independent
appraiser annually.  The fiscal 1997 appraisal covered approximately 49% 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  51%  of  the inventory was estimated by
management based in part  on  operating  history  and in part on the
results of the independent appraisals done. The price at which pieces are
consigned is usually in line with appraisals and above the cost of the
piece.




                                     19




     In fiscal 1997 Canal recognized a $350,000 valuation allowance against
its  art  inventory,  thereby,  increasing  the  total  value  allowance to
$2,850,000  as of October 31, 1997 compared to $2,500,000 and $1,000,000 at
October 31, 1996 and 1995, 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. 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.

     As   of  October  31,  1997  the  valuation  allowance  of  $2,850,000
represented  a  50%  reduction  in  the carrying value of the Company s art
inventory    which    management  believes  approximates its net realizable
value.    Accordingly,  the  Company  will, on a prospective basis, use the
adjusted  carrying  value  for  the  cost  of  sales, thereby, reducing the
valuation  reserve (proportionately) as the inventory is sold.  This policy
resulted  in  a  first  quarter  reduction  in  the  valuation allowance of
$380,000 on sales of art with an historic cost of $761,000.

     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 from  these  sales  are  used  to reduce the Company s outstanding
debt and finance  current  operations.   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 further rescheduling of
debt.  Some of these measures were successfully implemented in fiscal 1997. 


Art Revenues

     Art  revenues  for  the  six  months  ended April 30, 1998 of $206,000
increased  $186,000 from $20,000 for the same period in 1997.  Art revenues
are comprised of proceeds from the sale of antiquities and contemporary art
(100.0%  and  85.3%)  and  commission  income on sale of art owned by third
parties (0.0% and 14.7%) for the six month periods ended April 30, 1998 and
1997,  respectively.  The Company s art inventory was reduced through sales
by $381,000 in the first half of fiscal 1998.
     
     Art  revenues  for  the  three  months ended April 30, 1998 of $48,000
increased  $46,000  from  $2,000 for the same period in 1997.  Art revenues
are comprised of proceeds from the sale of antiquities and contemporary art
(100.0% and 100.0%) and commission income on the sale of art owned by third
parties  (0.0%  and  0.0%) for the three month periods ended April 30, 1998
and 1997, respectively.

                                     20




Art Expenses

     Art  expenses  for  the  six  months  ended April 30, 1998 of $402,000
increased  by  $355,000  from  $47,000  for  the  same period in 1997.  Art
expenses (net of a valuation allowance of $380,00 in fiscal 1998) consisted
of  the  cost  of  art  sold  (95.0%  and  56.5%)  and selling, general and
administrative  expenses  (5.0%  and 43.5%) for the six month periods ended
April 30, 1998 and 1997, respectively.
     
     Art  expenses  for  the  three months ended April 30, 1998 of $112,000
increased  by  $99,000  from  $13,000  for  the  same  period in 1997.  Art
expenses   consisted of the cost of art sold (net of valuation allowance of
$100,000  in  fiscal  1998)  (91.0%  and  17.3%)  and  selling, general and
administrative  expenses (9.0% and 82.7%) for the three month periods ended
April  30,  1998 and 1997, respectively.  It is the Company s policy to use
the  adjusted  carrying  value  for  sales,  thereby reducing the valuation
reserve (proportionately) as the inventory is sold.


General and Administrative

     General and administrative expenses for the six months ended April 30,
1998 of $563,000 decreased $57,000 (9.2%) from $620,000 for the same period
in  1997.   The major components of general and administrative expenses are
officers  salaries  (38.3%  and  34.8%),  rent  (8.6%  and 9.8%), legal and
professional fees (8.5% and 10.2%), insurance (12.3% and 11.6%), and office
salaries  (9.9%  and  10.9%) for the six month periods ended April 30, 1998
and  1997,  respectively.    The  percentage  changes  in  the year to year
comparisons  are  due  primarily  to  the aggregate decrease in general and
administrative expenses in fiscal 1998.
     
     General  and  administrative expenses for the three months ended April
30,  1998  of  $284,000 decreased $23,000 (7.4%) from $307,000 for the same
period  in  1997.    The  major  components  of  general and administrative
expenses  are  officers  salaries  (37.9% and 35.1%), rent (8.4% and 9.9%),
legal  and  professional fees (8.4% and 10.3%), insurance (12.1% and 11.7%)
and  office  salaries  (9.8%  and  10.9%) for the three month periods ended
April 30, 1998 and 1997, respectively. 


Interest and Other Income

     Interest  and  other  income  for  the six months ended April 30, 1998
decreased  to  $1,000  from  $79,000 for the same period in 1997.  The 1997
results  included  a  $75,000  reversal  of an amount previously accrued to
settle  certain litigation related to Canal s 1988 sale of property located
in Portland, Oregon.

     Interest  and  other  income for the three months ended April 30, 1998
decreased  to  $300  from $1,800 for the same period in 1997.  Interest and
other income is comprised primarily of interest income.

                                     21




Interest Expense

     Interest  expense  for  the  six months ended April 30, 1998 decreased
19.5% to $423,000 as compared to $525,000 for the same period in 1997.  The
1998 decrease is due primarily to a reduction in aggregate debt outstanding
at  April  30,  1998  as compared to the same period in 1997.  For the most
part interest rates on Canal s debt have remained unchanged for the past 12
months.

     Interest  expense  for the three months ended April 30, 1998 decreased
19.6%  to $209,000 as compared to $260,000 for the same period in 1997. The
1998   decrease  is  due  primarily  to  the  decrease  in  aggregate  debt
outstanding.

















                                     22


                                      





















                                  PART II

                             OTHER INFORMATION





























                                     23


Item 1:        Legal Proceedings:
               
               See Item 3 of Canal s October 31, 1997 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         
                                        Reginald Schauder
                                        Vice President-Finance &
                                        Chief Financial Officer




Date: June 12, 1998


























                                     25