Re: What do I have?
Sounds to me like you were successful in obtaining an honest "war relic" Luger in average condition for a price that is at least in the ballpark. The condition you describe is typical for Lugers that carried by combat soldiers for 5 to seven years and often carried by GI's for sevral months after capture, this is speculation but was certainly very common. It is of course a Mauser (S/42) 1938 made German military contract Luger and appears that all parts, at least outside match except the mag. The grips are wood (walnut) if original and these sound like they are. It is a pistol that was there and is a great represenative example of just that. It should have strong appeal to anyone collecting WWII military items who wants examples battlefield used equipment and arms. It will have less appeal to the strictly Luger/Gun collector, most of whom seek out examples in factory new condition. Fortuniatly there are many tastes and objectives in the broad sense of the hobby and this example has a legitmate place.
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