EXHIBIT 99.2
                               ------------

                            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



Mr. Edward L. Machulak
903 West Green Tree Road
River Hills, Wisconsin  53217

Dear Mr. 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 Edward L. Machulak (ELM) as an
individual and not as a Director or Officer of Commerce or its
subsidiaries or as the authorized designee of the Joint Venture 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 ELM and the collateral pledged to ELM 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 (Note) dated
        October 1, 1989 in which all of the prior promissory notes were
        consolidated into this single Note amounted to $490,217.19 as of
        that date.  All future advances and interest, not paid, are added
        to this Note.  This Note, together with cash and other advances
        and interest as of March 31, 2000, amounts to $3,072,267.94.
        This Note bears interest, payable monthly, at the rate of 2% over
        the prime rate established from time to time by the First
        National Bank of Chicago, Chicago, Illinois, (now Bank One), but
        not less than 16% per annum (Schedule of Principal and Interest
        as of March 31, 2000, Exhibit A).  Commerce is no longer issuing
        monthly promissory notes for the payment of interest, etc., but
        pursuant to our understanding, Commerce is adding these
        liabilities or deducting any payments to the current open-ended
        outstanding promissory note(s).

<PAGE>

    b.  In addition, Commerce owes ELM the sum of $1,839,015 which is due
        for unpaid and accrued salaries for a period of nineteen (19)
        years beginning on April 1, 1981 through March 31, 2000.
        Commerce further acknowledges that ELM's monthly salary for
        nineteen (19) years is as follows:  eleven years at $67,740
        annually ($745,140); four years and six months at $114,750
        annually ($516,375); and three years and six months at $165,000
        annually ($577,500).

    c.  To infuse funds into Commerce, Commerce borrowed ELM's Commerce
        shares and ELM sold these shares as designee for Commerce's
        benefit with Commerce receiving all of the proceeds.  For these
        share loans, Commerce has agreed to pay ELM interest at the rate
        of prime plus 3%, payable monthly with Commerce's restricted
        common shares and based on the Commerce shares due to ELM.
        Interest is also due and payable monthly with Commerce's
        restricted common shares for the shares pledged by ELM as
        collateral to others, all for the Company's interest and benefit.
        All share loans and interest are to be paid annually on March 31
        of each year.  An accounting of the Commerce common shares due
        and/or paid to ELM as of March 31, 2000, pursuant to a series of
        Director-approved, open-ended, on-demand loan and promissory note
        agreements by and between Commerce and ELM dated April 1, 1990,
        May 17, 1989, October 14, 1988 and June 20, 1988, and for certain
        continuous loans and/or pledges of ELM's securities that have
        taken place and continue to occur during the fiscal year ended
        March 31, 2000 is as follows:

        1. Share loans                                        375,566
        2. Interest shares due on shares pledged to banks
           for an open line of credit                          21,964
        3. Interest shares due on shares sold for the
           benefit of Commerce                                 13,774
           Total Commerce common shares paid and issued       -------
           as of March 31, 2000 to ELM                        411,304
                                                              =======

        Therefore, there were no shares due to ELM for share loans as of
        March 31, 2000.

    d.  Reference is made to four Director-approved, open-ended loan
        agreements dated June 20, 1988, October 14, 1988, May 17, 1989
        (Exhibits B, C and D of the April 12, 1993, confirmation letter)
        and April 1, 1990 (Exhibit 2 of the April 9, 1990 confirmation
        letter).

    e.  On October 23, 1993, in order to comply with the El Salvador
        Government's minimum capital requirements, the shareholders of
        Mineral San Sebastian S.A. de C.V. (Misanse) voted to increase
        Misanse's capitalization from 119,500 colones to 260,000 colones.
        This was accomplished via a shareholders' rights offering on the
        basis of purchasing one share for each share owned with the
        rights expiring on December 10, 1993.  According to Misanse's
        by-laws, the rights not exercised would be offered
        proportionately to the shareholders who did exercise their
        rights.

<PAGE>

        In addition to the rights offering, the shareholders authorized
        the sale of 210 additional common shares to the following:  ten
        shares to each of the four officers/directors (40 shares), five
        shares to each of the remaining six directors (30 shares), three
        shares to each of the ten supplemental directors (30 shares),
        (the President and the Secretary of the Company, who are
        directors of Misanse, had the right and they purchased ten and
        three shares respectively), and 110 shares were sold  to the
        Company over and above the amount of shares it was entitled to by
        the rights offering so that it would retain its 52% ownership.
        When the Company obtained the concession in 1987, it agreed with
        the El Salvador Minister of Economy's office not to increase its
        52% ownership of Misanse.  Therefore, after the rights offering,
        the Company owned approximately 52%.

        On the closing date of December 10, 1993 of this rights offering,
        there were 264 shares that were not subscribed and purchased.
        The Company would have been entitled to purchase 137 shares (264
        x 52%).  However, the Company had been prohibited to purchase
        these shares as it would have exceeded its 52% ownership of
        Misanse shares.  The 137 shares were acquired by ELM with prior
        approval of Commerce's directors.  He acquired an additional four
        shares by virtue of his proportionate ownership.  A Misanse
        Director-approved drawing was held to sell the unsubscribed
        shares.  In order to close the sales, 52 shares were purchased by
        ELM which he agreed in writing to hold these shares in escrow for
        a period of one year for the purpose of providing certain El
        Salvador Misanse shareholders time to obtain funds to purchase
        these shares at his cost.  None were purchased by the Misanse
        shareholders.

        During June 1995, ELM personally purchased an additional 264
        Misanse common shares from a Misanse shareholder in an
        arms-length transaction.  Therefore ELM presently owns a total of
        467 Misanse common shares or approximately 17.96% of the total
        2,600 Misanse common shares issued and outstanding.

2.  Collateral Pledged to ELM

    The collateral specifically pledged to ELM is as follows:

<PAGE>

    a.  A Collateral Pledge Agreement dated October 14, 1981 granted to
        ELM by Commerce pledging the following collateral:  2,002,037
        shares of Sanseb common stock, par value $0.10 per share and
        1,346 shares of Mineral San Sebastian, S.A. de C.V. common stock,
        par value one hundred colones per share.  The shares pledged are
        as follows:  the 618 shares originally owned by Commerce, and the
        618 shares plus 110 shares purchased from the October 23, 1993
        Misanse rights offering.  Reference is made to Exhibit 4 included
        in the April 9, 1990 confirmation letter.

    b.  A Collateral Pledge Agreement dated February 24, 1983, by
        Commerce, SLE and UDI collectively and individually, pledging the
        following collateral:

        300 shares of no par value common shares of Homespan (formerly
        known as Trade Realty Co., Inc.), Certificate No. 7 dated January
        21, 1974, being 100% of its issued and outstanding shares.
        Homespan and Commerce agree that no additional shares of Homespan
        will be issued as long as there are any obligations due to ELM;
        1,800 shares of no par value (UDI) capital stock Certificate No.
        17 dated September 15, 1972, representing 100% of the shares
        issued and outstanding.  UDI and Commerce agree that no
        additional shares of UDI will be issued as long as there are any
        outstanding obligations due to ELM.  Reference is made to Exhibit
        5 included in the April 9, 1990 confirmation letter.

    c.  Collateral Pledge Agreement dated July 13, 1983 granted to
        General Lumber & Supply Co., Inc. (GLSCO) and ELM by Commerce,
        SLE, and UDI, individually and collectively, pledging the
        following collateral:

        419,000 shares of fully paid and nonassessable shares of the par
        value of $.05 each of the capital stock of International Property
        Exchange, Inc. (IPE), formerly known as Capital Funding &
        Development Corp., Certificate 2885 dated June 30, 1983; and it
        was verified during Commerce's fiscal year that the State of
        Nevada Charter was cancelled because IPE did not comply with the
        Secretary of the State of Nevada annual filing requirements.

        One voting membership certificate of San Luis Valley Irrigation
        Well Owners, Inc., Membership Certificate No. 871, dated November
        27, 1979;

        Certificate No. 312, Membership No. 871, consisting of .001447
        units of Augmentation Plan Number One of San Luis Valley
        Irrigation Well Owners, Inc. dated February 8, 1980;

        100 common shares of $0.10 par value, Piccadilly (now Ecomm),
        Certificate No. 1, dated July 23, 1974.  Ecomm and Commerce agree
        that no additional shares of Ecomm will be issued as long as
        there are any outstanding obligations due to ELM. Reference is
        made to Exhibit 6 included in the April 9, 1990 confirmation
        letter.

<PAGE>

    d.  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 ELM
        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 first lien on the 331-acre
        Standing Rock  Campground located in Camdenton, Missouri.  The
        Deed of Trust was recorded on November 5, 1984 in Camden County,
        Missouri at 1:24 p.m. in Book 122, Page 200.  Reference is made
        to Exhibit 7 included in the April 9, 1990 confirmation letter.

    e.  Two Deeds of Trust to a Colorado Public Trustee granted by SLE to
        ELM are described as follows:

        A Deed of Trust dated March 20, 1984, consisting of four lots in
        the San Luis North Estates Subdivision, Costilla, Colorado, and
        recorded at 9:01 a.m. on August 2, 1984, in Book 238, Page 600,
        Reception No. 157128;

        A Deed of Trust dated October 4, 1982, consisting of six parcels
        of land in the San Luis North Estates Subdivision, Costilla,
        Colorado, and recorded at 8:40 a.m. on October 6, 1982, in Book
        228, Pages 300-301, Reception No. 148981.  Reference is made to
        Exhibit 8 included in the April 9, 1990 confirmation letter.

    f.  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
        the Joint Venture, and to the mine concession granted by the
        Government of El Salvador to 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.  Reference is made to Exhibit 9 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 of the precious metal ore
        reserves, is pledged as collateral to the above named parties.

<PAGE>

    g.  An interest with GLSCO 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,
        Commerce/Sanseb 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 10, 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.

    h.  Commerce and Sanseb agree that ELM has as collateral, the
        assignment and pledge of all of their rights, titles, claims,
        remedies, and interest whatsoever in the Joint Venture which was
        formed on September 22, 1987.  In the event of default, whatever
        interest Commerce and Sanseb have in the Joint Venture will be
        transferred to ELM and it will include whatever assets are owned
        by the Joint Venture, including, but not limited to the precious
        metal ore reserves.  Reference is made to Exhibit C included in
        the April 8, 1991 confirmation letter.

<PAGE>

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 the 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.

4.  Bonus

    On February 16, 1987, by a Consent Resolution of all of the
    Directors, ELM was awarded as a bonus compensation, the following:
    for a period of 20 years, commencing the first day of the month
    following the month in which Commerce begins to produce gold from its
    El Salvadoran gold mining operations, Commerce will pay annually to
    ELM, 2% of the pre-tax profits earned from these operations.
    Reference is made to Exhibit 11 included in the April 9, 1990
    confirmation letter.

5.  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.

<PAGE>

6.  Guarantors

    This agreement further confirms that Commerce and all of the
    following are guarantors to the loans made by ELM to Commerce:  Joint
    Venture, Homespan, Ecomm, SLE, Sanseb and UDI.  They jointly and
    severally guarantee payment of the note(s) that were issued to ELM
    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 12 included in the April 9, 1990
    confirmation letter.

7.  Omissions

    Commerce believes that it has included all of its obligations, monies
    due and has listed all of the collateral due to ELM, 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.

8.  Real Estate Ownership Adjacent to San Sebastian Gold Mine, Inc.
    (SSGM)

    Commerce acknowledges that ELM personally owns the real estate
    adjacent to and bordering the north boundary line of the SSGM located
    in the Republic of El Salvador, Central America, and that Comseb is
    performing certain exploration and exploitation on this property.
    These costs are to be payable by an offset to the amounts due to ELM.
    (Reference is made to Exhibit B, "Concesion de Exploracio El Paraiso"
    - plat map that identifies the ELM (Macay) "92.13 Hectareas," in the
    April 13, 1998 confirmation letter).

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 L. 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:

/s/ Edward L. Machulak
__________________________________________
Edward L. Machulak, as an Individual and
not as a Director or Officer of any of the
Corporations mentioned in this letter.
Date:  May 8, 2000



                           Exhibit A to Exhibit 99.2
            (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).