Produced in December 1939 / January 1940, this pistol belongs to the Second Developmental Stage of the P38, a grouping so rare that according to expert Warren Buxton's book "The P.38 Pistol", this is the only identified example and most importantly the beginning of the Nazi P38 Military contract. The First through Fourth Developmental stages were among the earliest prototypes of the P38 pistol, part of a range beginning at "1001" and they were marked HP, during which every gun was a test bed for features considered for the main run of production. Being such a low number in this range, this is the FIRST pistol to bear the "P.38" markings. Similar overall to the very early Zero Series pistols, this pistol is outfitted with a unique safety and cocking arrangement; unlike the combined safety/ decocker seen on almost all P38s, this example is fitted with a decocker alone, which works in conjunction with a retracting rectangular firing pin and an "anvil" pattern hammer. Additionally, the configuration results in the hammer not engaging when the slide is cycled, making the pistol "double action only" in semi-automatic fire, with the option to manually cock the hammer still present. While the decocker lever is a feature that remains popular to this day, the style of double action employed on this pistol is very unique. The grips are also of an earlier style, featuring a section of material which extends up behind the slide catch, a section which would be deleted from regular production in order to increase the ruggedness of the grips. Early style slide, lightly flared out ahead of the serrations, with a concealed extractor, Walther banner and "P.38" on the left side, and a single "eagle/ 359" proof on the reverse. The "359" is repeated on the slide catch, with matching partial number "020" on the side of the locking block. Grips are checkered black plastic, with the round indentation around the lanyard staple, and "0939" and "eagle/ 359" on the magazine.

Near new, with 99% bright original high polish blue finish, showing some mild handling marks and edge wear. Grips are very good, mild handling marks and sharp checkering. Mechanically excellent. This pistol is the "HOLY GRAIL" of the P38 collecting world.