Paul J. Diemer, 38 years old, former officer of the 148th Field Artillery, shot and killed himself yesterday morning just outside the Seventh Precinct Police Station in Jersey City.  Until about a month ago he lived in Montclair and more recently with a brother at 8 Whitestone Avenue, Whitestone, Long Island.

The police said they found one pistol near Diemer's body and another in his car, which was nearby.  In his coat were several letters, some of which showed that his suicide might have been the result of the Wall Street slump.

One letter apparently was in reply to a letter sent by Diemer to a broker, asking either for assistance or a job.  He had been a customers' man.  The broker's letter, the police said, explained that his first duty was to persons involved in the recent market break, and that Diemer was not such a victim, but was rather the victim of his own extravagance.

In another note timed at 2:20 A.M., yesterday, the note police said, Diemer explained that he was taking his life in order that his estate might benefit by about $16,000 insurance.  He asked that his body be cremated and the ashes scattered.

The brother, Edward S. Diemer, with whom the dead man has lived, said he could give no reason for his brother's action.  He claimed the body.