Messersmith, G.S., Berlin. Despatch No. 1421 to Secretary of State [Cordell Hull], Washington.

Summary of recent developments in political, economic, social and industrial situation in Germany; individual and unauthorized action by intermediate Party and S.A. leaders continues to disturb business; open breeches of discipline numerous; Hitler, in speech before S.A. leaders, warned that offenders would be punished, no matter how highly placed in Party; in speech before Statthalter (personal representatives of Chancellor in various states) Hitler declared that all political parties had been abolished and the National Socialist Party is now the state; last of the parties to be dissolved was the Zentrum, which represented the conservative Catholic element; physical force of S.A. played part in dissolution of parties, but German people seemed docile; concordat with Vatican announced by press, but text of agreement not yet revealed; Protestant Churches now powerless before authorities; parliamentary government in Germany out as long as present regime remains in power; Reichstag probably will not even meet; government now consolidating its power; every important person who could be considered even a potential opponent of present government has been sent to concentration camp or prison; has been informed Hitler will shortly announce determination of Government to stop experiments in business and to use men of proven capacity in business whether they are National Socialists or not; several men of moderate views recently appointed to high office; Goebbels' influence apparently waning, but he will not be easy man to put aside; work on highways to be under direction German Railway System, which is in sound financial position and may be able to finance program out of its earnings; according to press, unemployment 1,200,000 less than Jan. 30, though figure probably exaggerated; recrudescence of movement against Jews in past two weeks; 30 Jewish physicians arrested on July 7 on charge that they were engaged in Marxistic propaganda; Germany making some progress in relations with outside world; close contact with Italy continues, way prepared for close economic and political cooperation with Hungary, extreme nationalism has alarming effect on trade