DWM was very familiar with the 7.63 Mauser (7.62x25) cartridge, as this was the cartridge designed for the C-93 Borchardt. The prototype C-96 Mauser was designed to fire the Borchardt round (Ezell, p.388), and Mauser was licensed to use the cartridge. The Ludwig Loewe company, the producers of the Borchardt, held the controlling portion of Mauser stock, and their representitive on the Mauser board of directors voted in favor of C-96 production. It seems fairly obvious that they recognized the profit potential of the Mauser using their ammunition.
I have read that this decision angered Hugo Borchardt, becaise this meant that the company which was producing his gun was also supporting his competition--this may have been a factor in Borchardt's refusal to be involved in the C-93's evolution.
Georg Luger designed a shorter 7.65mm cartridge (7.65x22) because the 7.62x25 was too long for the new pistol grip as he visualized it.
I have not heard that the IMKK banned the 7.63 Mauser cartridge. To the contrary, the C-96 remained in commercial production unti 1939.
--Dwight
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