Hi Joe,
A bit slow on the draw. I have been researching possibilities.
If it is " III ", then it could be:
III = 3rd Batallion
E. = Ersatz infantry or possibly Eisenbahn [railroad]
7 = Kompanie 7 or Stab [staff] Weapon Nr 7
If it is marked 111. Which it appears to be due to the size of the numerals.
111th Ersatz Infantry Regiment . Company 7 or Stab weapon #7.
There is also a possibility that the E is an L mingled with an R. Or over stamped.
111th Landwehr Regiment . Company 7 or Stab weapon #7.
Which ever it is. It appears to be an incomplete marking, or incorrectly done. Which isn't uncommon, as armorers were often confused by the directives.
Usually "Stab" or staff pistols would have a space between the E or L.R. for later application of the company number. And then followed by the weapon number 7 (?).
Sorry this isn't more concise, but sometimes unit markings can be very confusing. Especially if not applied properly, as it seems in this case.
I vote for 111th Landwehr Regiment .
Ron
