EXHIBIT 99.1
                               ------------
                            COMMERCE GROUP CORP.
                           6001 NORTH 91ST STREET
                         MILWAUKEE, WI  53225-1795
                      414/462-5310 . FAX 414/462-5312

    Stock Symbols:  CGCO (OTC BB) CMG OR CMG.BN (Boston Stock Exchange)

AND/OR COMMERCE/SANSEB JOINT VENTURE (Joint Venture)
AND/OR HOMESPAN REALTY CO., INC. (Homespan)
AND/OR ECOMM GROUP INC. (Ecomm)
AND/OR SAN LUIS ESTATES, INC. (SLE)
AND/OR SAN SEBASTIAN GOLD MINES, INC. (Sanseb)
AND/OR UNIVERSAL DEVELOPERS, INC. (UDI)
ALL LOCATED AT THE SAME ADDRESS


May 8, 2000


Mrs. Sylvia Machulak
President
General Lumber & Supply Co., Inc.
6001 North 91st Street
Milwaukee, Wisconsin  53225

Dear Mrs. Machulak:

At today's Commerce Group Corp. (Commerce) Directors' meeting, the
Directors were informed about the confirmation and status letter you
requested from Commerce and its affiliates to establish and confirm the
amount due and the collateral pledged to General Lumber & Supply Co.,
Inc. (GLSCO)  as of Commerce's fiscal year ended March 31, 2000.  Today,
Commerce's Directors approved, ratified and confirmed the contents of
this letter and authorized me to authenticate and confirm the outstanding
obligations due to GLSCO, and to describe the collateral pledged to GLSCO
as of Commerce's fiscal year ended March 31, 2000, which are as follows:

1.  Promissory Notes and Other Obligations

    a.  An open-ended, secured, on-demand promissory note no. 3 which was
        originally issued to GLSCO on December 31, 1981 in the sum of
        $16,836.37 and has been open-ended since that date and is to
        include all future advances, services, charges and interest on a
        monthly basis.  Pursuant to Commerce's Directors' approval on
        October 1, 1990, the interest rate on this note was increased to
        a rate of 4% over the prime rate base established by the First
        National Bank of Chicago, Chicago, Illinois.  Beginning with
        April 1, 1994, the interest rate is 4% over the prime rate base
        established by the First National Bank of Chicago, Chicago,
        Illinois, (now Bank One), but not less than 16% per annum.  The
        interest is payable monthly and the total amount due to GLSCO on
        this promissory note as of March 31, 2000 is $1,808,513.83.
        (Schedule of Principal and Interest as of March 31, 2000, Exhibit
        A)

<PAGE>

        Commerce is no longer issuing monthly promissory notes for the
        payment of interest, purchases, rent, etc., but pursuant to our
        understanding, Commerce is adding these liabilities or deducting
        any payments to the current open-ended outstanding promissory
        note(s).

    b.  Commerce leased approximately 3,100 square feet on a
        month-to-month basis for its corporate headquarter's office; the
        monthly rental charge was $2,145 since October 1, 1992.  As of
        December 1, 1995, Commerce increased the space it rents to 4,032
        square feet, and the monthly rental charge was increased to
        $2,789.  All other terms and conditions of the Amended October 1,
        1992 Lease Agreement remain the same.  (Reference is made to
        Exhibit B, December 1, 1995 Amended Lease Agreement, included in
        April 13, 1998 confirmation letter.) (Reference is made to
        Exhibit B, Lease Agreement, included in April 12, 1993
        confirmation letter.)

    c.  Commerce also acknowledges that it purchases on an open account
        from GLSCO from time to time materials, supplies etc. that it
        needs for itself or for the Joint Venture.  Some of the purchases
        are made through GLSCO because Commerce does not have the credit
        availability from the various sellers of goods, merchandise, etc.
        that is required by it or the Joint Venture.  The amount due from
        time to time varies.  As of March 31, 2000, the amount due on
        this open account is $0.00.

    d.  GLSCO from time to time has canceled part of its debt by the
        purchase of restricted Commerce common shares at a price as sold
        to third party purchasers on an arms-length transaction.  There
        were no such transactions consummated during this fiscal year.

    e.  On January 22, 1997, four-year stock options to purchase 68,000
        restricted Commerce common shares, $0.10 par value, at a price of
        $3.00 per share, were issued to GLSCO based on arms-length
        transactions that had taken place at that time.

    f.  On July 12, 1999, two-year stock options to purchase 500,000
        restricted Commerce common shares, $0.10 par value, at a price of
        $0.50 per share were issued to GLSCO based on arms-length
        transactions that had taken place at that time.  These options
        were given in view of the credit granted to Commerce by GLSCO.

<PAGE>

2.  Collateral Pledged to GLSCO

    The collateral specifically pledged to GLSCO is as follows:

    a.  San Luis Estates, Inc. (SLE) Certificate No. 24 which is dated
        December 31, 1981, consisting of 48,645 common shares, $0.50 par
        value, being 50% of the total issued and outstanding shares.  SLE
        and Commerce agree that no additional shares of any kind
        whatsoever of SLE will be issued as long as any monies are due to
        GLSCO.  Reference is made to Exhibit 3 included in the April 9,
        1990 confirmation letter.

    b.  A Deed of Trust dated November 3, 1983 by and between Homespan,
        as party of the first part, and Ronald K. Carpenter, Esq.
        (Trustee), as party of the second part, for the benefit of Edward
        L. Machulak (ELM),  as an individual, and not as a Director or
        Officer of Commerce and GLSCO, as party of the third part.  The
        Deed of Trust is in favor of ELM and GLSCO and is open-ended to
        secure the promissory note(s) due to ELM and GLSCO and to further
        secure any future obligations that Commerce or Homespan may incur
        from them.  This Deed of Trust is issued to Ronald K. Carpenter,
        Esq., Trustee for the benefit of ELM and GLSCO and is a lien on
        the 331-acre Standing Rock Campground located in Camdenton,
        Missouri.  The Deed of Trust was filed for record on November 5,
        1984 in Camden County, Missouri at 1:24 p.m. in Book 122, Page
        200.  Reference is made to Exhibit 4 included in the April 9,
        1990 confirmation letter.

    c.  GLSCO, ELM, the Edward L. Machulak Rollover Individual Retirement
        Account (ELM RIRA) and the Sylvia Machulak Rollover Individual
        Retirement Account (SM RIRA) collectively and individually
        identified as the lender(s),   have been assigned on October 19,
        1987, all of the rights, titles, claims, remedies and interest in
        and to the mine concession granted by the Government of El
        Salvador to Mineral San Sebastian, S.A.  de C.V. (Misanse) on
        July 23, 1987, and thereafter from time to time amended, and
        which Misanse then assigned to the Joint Venture on September 22,
        1987.  This collateral specifically includes all of the San
        Sebastian Gold Mine precious metal ore reserves.  Commerce and
        the Joint Venture have the right to assign this and any
        subsequent concession agreement.  Commerce and the Joint Venture
        have the right to assign this and any subsequent concession
        agreement.  Reference is made to Exhibit 5 included in the April
        9, 1990 confirmation letter. Effective February 1996, the
        Government of El Salvador approved a revised version of the
        mining law.  Therefore, Commerce applied for the San Sebastian
        Gold Mine mining concession applicable to this mining law.  This
        concession is subject to compliance requirements which have been
        presented to the El Salvador Director of Mines and Hydrocarbons.
        Therefore, it is clearly understood that this concession, and all
        of the rights thereunder, in addition to the concession granted
        on July 23, 1987, together with all precious metal ore reserves,
        is pledged as collateral to all of the parties herein mentioned.

<PAGE>

    d.  An interest with ELM in filing financing statements under the
        Uniform Commercial Code by an assignment and pledge of all
        corporate assets, such as but not limited to the property of
        Commerce, Joint Venture, SLE, and Homespan, wherever located, now
        owned or hereafter acquired is as follows:  all accounts, all
        land contract receivables, contract rights, instruments and
        chattel paper; all inventory, all jewelry and precious stones,
        and all documents relating to inventory, including all goods held
        for sale, lease or demonstration, to be furnished under contracts
        of service, and raw materials, work in process and materials and
        supplies used or consumed in the business of Commerce, Joint
        Venture, SLE, and Homespan; all office furniture, fixtures and
        all other equipment; all general intangibles, all stock and
        securities of any kind,  and all rights, titles, and interest in
        the Commerce Group Corp./San Sebastian Gold Mines, Inc. Joint
        Venture, and all additions and accessions to, all spare and
        repair parts, special tools, equipment and replacements for all
        returned or repossessed goods the sale or lease of which gave
        rise to, and all proceeds and products of the foregoing.
        Reference is made to the Uniform Commercial Code filing, Exhibit
        6, included in the April 9, 1990 confirmation letter and the
        renewed UCC-1 filing on December 17, 1996, Exhibit B, included in
        the April 14, 1997 confirmation letter.

3.  Cross Pledge Collateral Agreement

    GLSCO, ELM, the ELM RIRA and the SM RIRA individually are entitled to
    specific collateral that has been pledged to them by Commerce, its
    subsidiaries, affiliates and the Joint Venture.  Upon default by
    Commerce, or its subsidiaries or affiliates or the Joint Venture,
    GLSCO, ELM, the ELM RIRA and the SM RIRA have the first right to the
    proceeds from the specific collateral pledged to each of them.
    Commerce, its subsidiaries, affiliates and Joint Venture also have
    cross-pledged the collateral without diminishing the rights of the
    specific collateral pledged to each of the following:  GLSCO, ELM,
    the ELM RIRA and the SM RIRA.  The purpose and the intent of the
    cross pledge of collateral is to assure GLSCO, ELM, the ELM RIRA and
    the SM RIRA, that each of them would be paid in full; thus, any
    excess collateral that would be available is for the purpose of
    satisfying any debts and obligations due to each of the named
    parties.  The formula to be used (after deducting the payments made
    from the specific collateral) is to total all of the debts due to
    GLSCO, ELM, the ELM RIRA and the SM RIRA, and then to divide this
    total debt into each individual debt to establish each individual's
    percentage of the outstanding debt due.  This percentage then will be
    multiplied by the total of the excess collateral to determine the
    amount of proceeds derived from the excess collateral and then the
    amount due to each of them would be distributed.

<PAGE>

4.  Cancellation of Inter-Company Debts Upon Default

    Since part of the collateral pledged to GLSCO, ELM, the ELM RIRA and
    the SM RIRA is the common stock of Homespan, Ecomm, Sanseb, SLE,
    Misanse, UDI and the interest in the ownership of the Joint Venture,
    Commerce agreed, upon default of the payment of principal or interest
    to any of the individual lender(s) mentioned herein, that it will
    automatically cancel any inter-company debts owed to Commerce by any
    of its wholly-owned subsidiaries or affiliates or the Joint Venture
    at such time as any of the stock or Joint Venture ownership is
    transferred to the collateral holders as a result of default of any
    promissory note.

5.  Guarantors

    This agreement further confirms that Commerce and all of the
    following are guarantors to the loans made by GLSCO to Commerce:
    Joint Venture, Homespan, Ecomm, SLE, Sanseb and UDI.  They jointly
    and severally guarantee payment of the note(s) that they caused to be
    issued and also agree that these note(s) may be accelerated in
    accordance with the provisions contained in the agreement and/or any
    collateral or mortgages securing these notes.  Also, Commerce, all of
    its subsidiaries and the Joint Venture agree to the cross pledge of
    collateral for the benefit of GLSCO, ELM, the ELM RIRA and the SM
    RIRA.  Reference is made to Exhibit 7 included in the April 9, 1990
    confirmation letter.

6.  Omissions

    Commerce believes that it has included all of its obligations, monies
    due and has listed all of the collateral due to GLSCO, however, since
    these transactions have taken place over  a long period of time in
    which changes could have taken place, it is possible that
    inadvertently some item(s), particularly collateral, could have been
    omitted.  If that should prove to be a fact, then Commerce, the Joint
    Venture, Homespan, Ecomm, SLE, Sanseb, and UDI agree that those
    omissions of collateral, if any, are meant to be included as
    collateral with this confirmation and agreement.

<PAGE>

If you are in agreement with the contents of this letter, please sign
below and return one copy to Commerce.

Very truly yours,

COMMERCE GROUP CORP.

/s/ Edward A. Machulak
----------------------
Edward A. Machulak
Secretary

<PAGE>

The contents of this letter are agreed by the following:

COMMERCE/SANSEB JOINT VENTURE            HOMESPAN REALTY COMPANY, INC.
as Guarantor (Joint Venture)             as Guarantor (Homespan)

/s/ Edward L. Machulak                   /s/ Edward L. Machulak
______________________________________   __________________________________
By: Edward L. Machulak, Auth. Designee   By:  Edward L. Machulak, President


ECOMM GROUP INC.                         SAN LUIS ESTATES, INC.
as Guarantor (Ecomm)                     as Guarantor (SLE)

/s/ Edward A. Machulak                   /s/ Edward L. Machulak
__________________________________       __________________________________
By: Edward A. Machulak, Secretary        By:  Edward L. Machulak, President


SAN SEBASTIAN GOLD MINES, INC.           UNIVERSAL DEVELOPERS, INC.
as Guarantor (Sanseb)                    as Guarantor (UDI)

/s/ Edward L. Machulak                   /s/ Edward L. Machulak
__________________________________       ____________________________________
By:  Edward L. Machulak, President       By:  Edward L. Machulak, President


Accepted by:

GENERAL LUMBER & SUPPLY CO., INC.


/s/ Sylvia Machulak
____________________________________
By:  Sylvia Machulak, President
Date:  May 8, 2000

<PAGE>


                       Exhibit A to Exhibit 99.1
         (Schedule of Principal and Interest as of March 31, 2000
              has been purposely omitted as it only reflects
             the calculations of the principal and interest.)