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, 1999

                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 28, 1999
Common stock, $0.01 par value                4,326,929

(This document contains 21 pages)


                CANAL CAPITAL CORPORATION & SUBSIDIARIES 
                         CONSOLIDATED BALANCE SHEETS  
                   JANUARY 31, 1999 AND OCTOBER 31, 1998 
 
 
                                JANUARY 31,          OCTOBER 31,           
                                   1999                1998 
                                (UNAUDITED)           (AUDITED)            
                 
ASSETS: 
 
CURRENT ASSETS: 
 
 CASH AND CASH EQUIVALENTS      $    17,211        $     33,538 
 NOTES AND ACCOUNTS RECEIVABLE      227,466             211,070 
 ART INVENTORY, NET OF A
 VALUATION ALLOWANCE OF
 $ 1,500,000  AT JANUARY 31, 1999
 AND OCTOBER 31, 1998, RESPECTIVELY 500,000             500,000
 INVESTMENTS                        220,373             278,175 
 PREPAID EXPENSES                   153,135             173,938 
 
 TOTAL CURRENT ASSETS             1,118,185           1,196,721 
 
 
NON-CURRENT ASSETS: 
 
PROPERTY ON OPERATING LEASES, NET OF
 ACCUMULATED DEPRECIATION OF $1,728,382
 AND $ 1,671,222 AT JANUARY 31, 1999 AND  
 OCTOBER 31, 1998, RESPECTIVELY   5,803,904           5,861,064 
 
 
ART INVENTORY NON-CURRENT, NET OF
 VALUATION ALLOWANCE OF $ 1,366,700
 AT JANUARY 31, 1999 AND $1,900,000 AT   
 OCTOBER 31, 1998, RESPECTIVELY     772,021             949,125
            
 
 
OTHER ASSETS: 
 
PROPERTY HELD FOR DEVELOPMENT
 OR RESALE                        1,291,895           1,318,095 
DEFERRED LEASING AND 
 FINANCING COSTS                     12,033              12,866 
DEPOSITS AND OTHER                  165,828             169,578 
 
                                  1,469,756           1,500,539
 
                                $ 9,163,866         $ 9,507,449 
                               ============         =========== 
                                      






                                     2


                  CANAL CAPITAL CORPORATION & SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS  
                   JANUARY 31, 1999 AND OCTOBER 31, 1998 
                                               
                                         JANUARY 31,       OCTOBER 31,
                                             1999              1998
                                        (UNAUDITED)         (AUDITED)
LIABILITIES & STOCKHOLDERS' EQUITY: 
  
CURRENT LIABILITIES: 
 CURRENT PORTION OF LONG-TERM DEBT           110,000            110,000 
 ACCOUNTS PAYABLE AND ACCRUED EXPENSES     2,087,200          2,061,210 
 INCOME TAXES PAYABLE                          7,341             14,314  
 
 TOTAL CURRENT LIABILITIES                 2,204,541          2,185,524  
 
 
LONG-TERM DEBT, LESS CURRENT PORTION       2,256,813          2,321,433 
LONG-TERM DEBT, LESS CURRENT 
 PORTION-RELATED PARTY                     2,746,000          2,846,000  
 
                                           5,002,813          5,167,433  
COMMITMENTS AND CONTINGENCIES                 

STOCKHOLDERS' EQUITY: 
 
PREFERRED STOCK, $0.01 PAR VALUE: 
 5,000,000 SHARES AUTHORIZED; 3,411,681 AND 
 3,411,681 SHARES ISSUED AND OUTSTANDING 
 AT JANUARY 31, 1999 AND OCTOBER 31, 1998,
 RESPECTIVELY AND AGGREGATE LIQUIDATION  
 PREFERENCE OF $ 34,116,810 AND $ 34,116,810  
 AT JANUARY 31, 1999 AND OCTOBER 31, 1998
 RESPECTIVELY                                 34,117              34,117 
 
COMMON STOCK, $0.01 PAR VALUE: 
 10,000,000 SHARES AUTHORIZED; 5,313,794 
 SHARES ISSUED AND 4,326,929 SHARES OUTSTANDING  
 AT JANUARY 31, 1999 AND OCTOBER 31, 1998,
 RESPECTIVELY                                 53,138              53,138 
 
PAID-IN CAPITAL                           27,081,046          27,033,046  

RETAINED EARNINGS (DEFICIT)              (11,996,221)        (11,808,043) 
 
986,865 SHARES OF COMMON STOCK 
 HELD IN TREASURY, AT COST               (11,003,545)        (11,003,545) 

COMPREHENSIVE INCOME:
 VALUATION RESERVE                        (1,896,838)         (1,896,838) 
 UNREALIZED LOSS ON INVESTMENTS AVAILABLE 
  FOR SALE                                  (315,185)           (257,383) 

 
                                           1,956,512           2,154,492 
 
                                        $  9,163,866        $  9,507,449 
                                       =============       ============= 

                                    3   


               CANAL CAPITAL CORPORATION & SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME
          FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 1998



                                            1999            1998          
                                         (UNAUDITED)     (UNAUDITED)       

REAL ESTATE OPERATIONS:
 REAL ESTATE REVENUES:
  SALE OF REAL ESTATE                    $    60,000     $    16,000   
  RENTAL INCOME                              256,620         361,876       
  GROUND LEASE INCOME                        231,000         231,000       
  VOLUME BASED RENTAL INCOME                  21,645          34,730       
  OTHER INCOME                                 1,924           1,864     

                                             571,189         645,470    

 REAL ESTATE EXPENSES:
  COST OF REAL ESTATE SOLD                    40,897           6,845       
  LABOR, OPERATING AND MAINTENANCE            98,759         212,972       
  DEPRECIATION AND AMORTIZATION               52,291          55,607       
  TAXES OTHER THAN INCOME TAXES               47,593          50,400       
  GENERAL AND ADMINISTRATIVE                  17,709          22,510     

                                             257,249         348,334     

INCOME FROM REAL ESTATE OPERATIONS           313,940         297,136     


ART OPERATIONS:
 ART REVENUES:
  SALES                                      162,400         158,200       
  OTHER REVENUES                                   0               0     

                                             162,400         158,200       

 ART EXPENSES:
  COST OF ART SOLD                           713,652         559,164       
  VALUATION RESERVE                         (533,300)       (280,000)      
  SELLING, GENERAL AND ADMINISTRATIVE         11,139           9,967     
    
                                             191,491         289,131     


LOSS FROM ART OPERATIONS                     (29,091)       (130,931)    











                                     4


                  CANAL CAPITAL CORPORATION & SUBSIDIARIES
        CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME
             FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 1998
                             Continued ...


                                            1999           1998           
                                        (UNAUDITED)     (UNAUDITED)      

GENERAL AND ADMINISTRATIVE EXPENSE    $  (262,526)     $  (278,615)    


INCOME (LOSS) FROM OPERATIONS              22,323         (112,410)       

OTHER INCOME (EXPENSE):
 INTEREST & OTHER INCOME                    5,974              627         
 INTEREST EXPENSE                         (60,475)        (148,232)       
 INTEREST EXPENSE-RELATED PARTY          (108,000)         (66,000)
 OTHER EXPENSE                                  0                0   

                                         (162,501)        (213,605)        
                                         

(LOSS) GAIN BEFORE PROVISION FOR INCOME 
  TAXES                                  (140,178)        (326,015)       

PROVISION (BENEFIT) FOR INCOME TAXES            0                0     

NET (LOSS)                               (140,178)        (326,015)       



OTHER COMPREHENSIVE INCOME (LOSS):

 UNREALIZED LOSS ON INVESTMENTS 
 AVAILABLE FOR SALE                       (57,802)               0    


COMPREHENSIVE LOSS                    $  (197,980)     $  (326,015)    
                                     =============    ============    


NET (LOSS) PER COMMON SHARE          $     (0.06)     $     (0.09)    
                                      =============    ============    















                                       5          


                  CANAL CAPITAL CORPORATION & SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
            FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 1998




                                           1999              1998          
                                        (UNAUDITED)       (UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES:
 NET INCOME (LOSS)                        $ (140,178)     $  (326,015)     

 ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO
 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:

 PROVISION FOR LITIGATION SETTLEMENT               0                0      
 DEPRECIATION AND AMORTIZATION                57,519           61,272      
 GAIN  ON SALES OF REAL ESTATE               (19,103)          (9,155)     


CHANGES IN ASSETS AND LIABILITIES:
 NOTES AND ACCOUNTS RECEIVABLES, NET         (16,396)          75,983  
 ART INVENTORY, NET                          177,104          277,960      
 PREPAID EXPENSES AND OTHER, NET              10,510          155,311      
 PAYABLES AND ACCRUED EXPENSES, NET           19,017         (169,830)     

NET CASH (USED) PROVIDED 
 BY OPERATING ACTIVITIES                      88,473           65,526 


CASH FLOWS FROM INVESTING ACTIVITIES:
 PROCEEDS FROM SALES OF REAL ESTATE           60,000           16,000
 PROCEEDS FROM SALE OF INVESTMENTS                 0                0      
 CAPITAL EXPENDITURES                              0           (9,485)   

NET CASH PROVIDED BY 
 INVESTING ACTIVITIES                         60,000            6,515    


CASH FLOWS FROM FINANCING ACTIVITIES:
 PROCEEDS FROM LONG-TERM DEBT-RELATED
  PARTIES                                          0           75,000      
 TRANSFERS TO LONG-TERM                            0                0 
 REPAYMENT OF LONG-TERM DEBT OBLIGATIONS    (164,620)        (186,514) 

NET CASH USED BY FINANCING ACTIVITIES       (164,620)        (111,514)  


NET (DECREASE) INCREASE IN CASH AND CASH
  EQUIVALENTS                                (16,147)         (39,473)     
CASH AND CASH EQUIVALENTS AT 
 BEGINNING OF YEAR                            33,358           28,225      

CASH AND CASH EQUIVALENTS AT
 END OF YEAR                             $    17,211     $   (11,248)      
                                         ============     ============


NOTE:    Canal  made  federal  and  state income tax payments of $7,000 and
$16,000  and  interest payments of $168,000 and $214,000 in the three month
periods ended January 31, 1999 and 1998, respectively.




                                     6




           CANAL CAPITAL CORPORATION AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
         FOR THE YEAR ENDED OCTOBER 31, 1998 (AUDITED) AND 
       FOR THE THREE MONTHS ENDED JANUARY 31, 1999 (UNAUDITED)


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

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    413,781   4,138      206,753
 MINIMUM PEN. LIAB. ADJ    0        0          0       0            0
 UNREALIZED GAIN 
  ON INVESTMENTS           0        0          0       0            0  
                 --------------------  -----------------  ----------- 

BAL, OCT 31, 1998 5,313,794    53,138  3,411,681  34,117   27,033,046
 NET INCOME (LOSS)        0         0          0       0            0  
 PREFERRED STOCK DIV      0         0          0       0       48,000 
 MINIMUM PEN. LIAB. ADJ   0         0          0       0            0 
 UNREALIZED GAIN
  ON INVESTMENTS          0         0          0       0            0
                 --------------------  -----------------   ----------

BAL, JAN 31, 1999 5,313,794   $53,138  3,411,681 $34,117  $27,081,046    
                 ====================  ================= ============ 


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

BAL, OCT31, 1997($10,194,335) ($1,485,641)  $   615,800  ($11,003,545)
 NET INCOME (LOSS)(1,413,470)           0             0             0      
 PREFERRED STOCK DIV(200,238)           0             0             0
 MINIMUM PEN. LIAB. ADJ.   0     (411,197)            0             0
 UNREALIZED GAIN ON INV.   0            0      (873,183)            0
               -------------  ------------   ----------  ------------

BAL, OCT31, 1998 (11,808,043) ($1,896,838)     (257,383)  (11,003,545)
 NET INCOME (LOSS)  (140,178)           0             0             0
 PREFERRED STOCK DIV (48,000)           0             0             0
 MINIMUM PEN. LIAB. ADJ.   0            0             0             0
 UNREALIZED GAIN ON INV.   0            0       (57,802)            0
               -------------  -----------   -----------  ------------   

BAL, JAN31, 1999($11,996,221) ($1,896,838)  $  (315,185) ($11,003,545)
               =============  ===========  ============  =============








                                     7




                 CANAL CAPITAL CORPORATION AND SUBSIDIARIES
               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                    THREE MONTHS ENDED JANUARY 31, 1999
                                (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  eight  of  the  last  ten  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.


                                     8


     

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
January  31,  1999 and the results of its operations and its cash flows for
the three month period ended January 31, 1999.  All of the above referenced
adjustments  were  of  a  normal recurring nature.  Certain information and
footnote  disclosures 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, 1998 and the notes thereto which are contained in Canal s
1998  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 1999.


4.   Property and Equipment

     Included  in  property  and  equipment  were  the cost of buildings of
approximately $2.5 million at January 31, 1999 and October 31, 1998.


5.   Notes Receivable

     Included in the notes and accounts receivable were the current portion
of  notes  from  real  estate sales in the amount of $15,000 at January 31,
1999 and October 31, 1998.


6.   INVESTMENTS AVAILABLE FOR SALE

     At  January  31,  1999 the investments available for sale consisted of
the following:


                                             January 31,      October 31,
     ($ 000's Omitted)                          1999             1998    
     
     Aggregate market value.................   $  220           $  278

     Aggregate carrying value...............   $  220           $  278



     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 


                                     9



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  three  months  ended  January  31,  1999 Canal recognized an
u n r e a l ized  loss  on  investments  available  for  sale  of  $58,000.
Additionally,  in  fiscal  1998  Canal  recognized  an  unrealized  loss on
investments  available  for  sale of $873,000, 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  $700,000 at January 31, 1999.  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 42% ($536,758) and 49% ($713,862) and 58%
($735,263)  and  51%  ($735,263) of total art inventory at January 31, 1999
and  October 31, 1998, 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.

        Canal  has  its art inventory appraised by an independent appraiser
annually.    The  1998 appraisal covered approximately 50% 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 



                                     10





and public auction sales.  The net realizable value of the remaining 50% 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 1998 Canal recognized a $550,000 valuation allowance against its art
inventory,  thereby, increasing the total valuation allowance to $3,400,000
as  of October 31, 1998 as compared to $2,850,000 and $2,500,000 at October
31, 1997 and 1996, respectively.  These estimates were based in part on the
Company  s  history  of  losses  sustained  on art sales in the current and
previous years. 

     As   of  October  31,  1998  the  valuation  allowance  of  $3,400,000
represented  a  70%  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 $533,000 on sales of art with an
historic cost of $714,000 in the first three months of fiscal 1999.

     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 1998.

     Canal  s art operations have generated operating losses of $29,000 and
$131,000  (net  of  decreases  in  the  valuation allowance of $533,000 and
$280,000  for  the  three  month  periods  ended January 31, 1999 and 1998,
respectively)  on  revenues  of  $162,000 and $158,000 for the three months
ended  January  31,  1999 and 1998, respectively.   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.

          

     Inventory  on  Consignment - The Company had approximately $214,000 of
art  inventory  on consignment with third party dealers at January 31, 1999
and October 31, 1998, respectively.








                                     11






8. BORROWINGS

     At January 31, 1999, 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:


                                           January 31,       October 31,
                                              1999            1998    
                                          (Unaudited)        (Audited)
(Thousands of Dollars)

Variable rate mortgage notes due
 May 15, 2001 - related party............    $ 2,746         $ 2,846


11% mortgage note; original principal
 amount $1,697; due April 1, 2011;
 payable in monthly installments
 (including interest) of $14..............     1,195           1,210


9.5% mortgage note; original principal
 amount $472; due November 1, 2012,
 payable in monthly installments
 (including interest) of $5...............       389             393


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..       464             466


Other Note................................       319             362



Total ....................................     5,113           5,277 

Less -- current maturities ...............       110             110



Long-term debt ...........................   $ 5,003         $ 5,167



                                     12


     

     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.  At January 31, 1999 the balance due
under these notes was $2,746,000.



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.




















                                   13  




                    Management s Discussion and Analysis
              Of Results of Operations and Financial Condition
                For the Three Months Ended January 31, 1999



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  eight  of  the  last  ten  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  a  net  loss of $140,000 for the three month period
ended  January  31, 1999 as compared to a net loss of $326,000 for the same
period  in  fiscal  1998.    After  recognition  of  an  unrealized loss on
investments  held  for  sale  of  $58,000  for the three month period ended
January  31,  1999  the Company recognized a comprehensive loss of $198,000
for  the  three  month  period  ended  January  31,  1999  as compared to a
comprehensive  loss  of  $326,000  for  the  same  period  in  fiscal 1998.
Further,  after recognition of preferred stock dividend payments of $48,000
for  the three month periods ended January 31, 1999 and 1998, respectively,
the Company recognized a loss applicable to common stockholders of $246,000
($0.06  per common share) for the three month period ended January 31, 1999
as  compared to a loss applicable to common stockholders of $374,000 ($0.09
per common share) for the same period in fiscal 1998.  


     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 $70,000 or
8.7%  to  $734,000  for  the  three month period ended January 31, 1999, as
compared  to  the  revenues  for the same periods in fiscal 1998.  The 1999
decrease is due primarily to a  decrease in revenues from rental income due
to the loss of the Sioux City Exchange Building (1998 fire) and a continued
high vacancy rate in the St. Paul Exchange Building.





                                     14




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  eight  of  the  last  ten  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.  At January 31, 1999 the balance due
under these notes was $2,746,000.  

     Cash  and  cash  equivalents  of $17,000 at January 31, 1999 decreased
$19,000  from $36,000 at October 31, 1998.  Net cash provided by operations
in  fiscal  1999  was  $88,000.  Substantially all of the 1999 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  1999 Canal reduced its variable rate mortgage notes by
$100,000  and other long-term debt by $65,000 for a net 1999 debt reduction
of $165,000. 

     At January 31, 1999 the Company s current liabilities exceeded current
assets  by  $1.1  million,  as compared to current assets exceeding current
liabilities  by  $1.0  million  at  October  31,  1998.   The only required
principal  repayments under Canal s debt agreements for fiscal 1999 will be
from  the proceeds of the sale of certain assets (if any) and approximately
$0.1 million on various fixed mortgages.



                                     15




     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 three months ended January 31, 1999 of
571,000  accounted  for  77.9% of the first quarter revenues as compared to
real  estate  revenues  of  $645,000  or 80.3% for the same period in 1998.
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 (44.9% and 56.1%), ground lease income
(40.4%  and  35.8%), volume based rental income (3.8% and 5.4%) and sale of
real  estate  and  other income (10.9% and 2.7%) for the three months ended
January  31,  1999 and 1998, respectively. The percentage variations in the
year  to  year comparisons are due primarily to the increase in real estate
sales for fiscal 1999.



Real Estate Expenses
     
     Real  estate  expenses  for the three months ended January 31, 1999 of
$257,000  decreased by $91,000 (26.1%) from $348,000 for the same period in
1998.    Real  estate  expenses  were  comprised  of  labor,  operating and
maintenance  (38.4%  and  61.1%),  depreciation and amortization (20.3% and
16.0%),  taxes  other  than  income  taxes  (18.5% and 14.5%), cost of real
estate  sold (15.9% and 2.0%) and general and administrative expenses (6.9%
and   6.4%)  for  the  three  months  ended  January  31,  1999  and  1998,
respectively.  The  percentage  variations  in year to year comparisons are
also due to the increase in the cost of real estate sold for fiscal 1999.



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.

                                     16





     Canal  has  its  art  inventory  appraised by an independent appraiser
annually.   The  fiscal  1998  appraisal  covered  approximately 50% 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  50%  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  1998 Canal recognized a $550,000 valuation
allowance  against  its  art inventory, thereby, increasing the total value
allowance  to  $3,400,000 as of October 31, 1998 compared to $2,850,000 and
$2,500,000 at October 31, 1997 and 1996, respectively.  These estimates are
based  in part on the Company s history of losses sustained on art sales in
the current and previous years. 


     As   of  October  31,  1998  the  valuation  allowance  of  $3,400,000
represented  a  70%  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
$533,000 on sales of art with an historic cost of $714,000.


     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 1998. 


Art Revenues

     
     Art  revenues  for the three months ended January 31, 1999 of $162,000
increased  $4,000  from $158,000 for the same period in 1998.  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 January 31, 1999
and 1998, respectively.







                                     17





Art Expenses
     
     Art  expenses  for the three months ended January 31, 1999 of $191,000
decreased  by  $98,000  from  $289,000  for  the  same period in 1998.  Art
expenses  consisted of the cost of art sold (net of valuation allowances of
$533,000  and  $280,000  for the three month periods ended January 31, 1999
and  1998,  respectively)  (94.2%  and  96.6%)  and  selling,  general  and
administrative  expenses  (5.8% and 3.4%) for the three month periods ended
January 31, 1999 and 1998, 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 three months ended January
31,  1999  of  $263,000 decreased $16,000 (5.8%) from $279,000 for the same
period  in  1998.    The  major  components  of  general and administrative
expenses  are  officers  salaries  (41.1% and 38.7%), rent (9.3% and 8.7%),
legal  and  professional  fees (6.9% and 8.6%), insurance (11.4% and 12.4%)
and  office  salaries  (10.6%  and 10.1%) for the three month periods ended
January 31, 1999 and 1998, respectively. 



Interest and Other Income


     Interest  and other income for the three months ended January 31, 1999
of  $6,000  increased  $5,000  from  $1,000  for  the  same period in 1998.
Interest and other income is comprised primarily of interest income.

                                      

Interest Expense


     Interest expense for the three months ended January 31, 1999 decreased
21.4%  to $168,000 as compared to $214,000 for the same period in 1998. The
1999   decrease  is  due  primarily  to  the  decrease  in  aggregate  debt
outstanding.







                                     18


                                      





                                  PART II

                             OTHER INFORMATION





























                                     19






Item 1:        Legal Proceedings:
               
               See Item 3 of Canal s October 31, 1998 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.





                                      













                                      




                                     20




                                 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



            
                                        /s/ Reginald Schauder    
                                        Reginald Schauder
                                        Vice President-Finance &
                                        Chief Financial Officer
Date: March 9, 1999






















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