When the German military finally could no longer tolerate the expense of the P.08 Luger in the late 1930s, they held a trial of possible replacements. The three main entrants were BSW with a gas-operated pistol, Walther with what would ultimately be accepted as the P.38, and Mauser with it’s experimental HSv locked-breech design. Mauser had begun development of the pistol as a replacement for the models 1910/14/34, with two stylistically matching designs – once blowback in small calibers and one locked for 9×19 Parabellum. The initial commercial design had a full-length slide, covering a recoil spring located around the barrel.
However, the German military requirements specifically called for an exposed barrel. This forced Mauser to redesign its recoil spring system, and they opted to use a lever system like in Webley automatic pistols. With that change, and having moved the magazine release to the pistol’s heel, they had an entrant for military testing.
It appears that the Mauser HSv in 9×19 was every bit as good of a pistol as the P.38 – and it actually feels better in the hand than the P.38 to me. However, the Mauser was significantly more expensive, which led to the Walther design winning. The Mauser design would follow a pattern much like the 1910 Mauser had – the small scale blowback design would prove very popular (as the HSc, adopted by the Kriegsmarine among others and selling very well commercially), but the locked breech larger design would fail to make any inroads and never enter production.