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Bit late to the topic but yes such a great piece of history and well worth keeping as it is very collectable. Just to add this is a first variant manufacture with the full address on the RHS, the grips should be made from natural horn which may be why they are a bit degraded due to aging (it's more than 100 years old!). The Mod 7 was not in production for long as Walther was fulfilling its wartime contract for the Model 4 (WW1).
 

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Yes, natural horn is subject to worm holes, I thought it looked like horn, but was not sure Walther used horn.
It's possible Horn was used as it was a relatively cheap and plentiful material (and possibly a 'quality' feel) as Bakelite was still a relatively new (American in origin and possibly expensive) material. I do however have some Mod 1 grips that are Bakelite - so, as in most things, there's no easy answer and maybe the Horn grips were an option?
 
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