Original 37 dated Torpedo rear hub with integrated 3 speed gear box. Dreigang Torpedo D.R.P. I did not test this on a bike, but I did test it mounted in my lathe and it does shift quite well. I did not notice any difficulties or catching, just smooth transition between speeds. It will likely need cleaned and tuned up, but you would probably do that anyway as part of your bike restoration.
The small length of chain sticking out of the side is what shifts the gears. It works by pulling the chain straight out and depending on how far out it is pulled it will change the speed. The shifter is spring loaded to pull the mechanism back to the first gear. This would have been connected up to a cable going to a little shifter (simple forward or backward shift) mounted to the handlebars. The shifter lever is what would provide the tension to keep the hub in a certain gear. A nice, relatively rare pre-war bike accessory.
