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Nice knife, I prefer to leave the nick or chip in the blade (rather than removing all that good metal). Glad you have a knife of your grandpas
 
Those 31 patterns are beasts. One of my favorites in the Case lineup. Your Grandpa had good taste in knives.
 
Great knife and an even better history. I'd give anything to have my grandfathers barlow, sadly no one knows where it ended up.
 
Oh, yes. Leave the nick in the edge. Maybe it will sharpen out by itself by the time you die. As for the rust inside, I'd just oil it occasionally so it won't go deeper.

I'm lucky. I have a couple of knives from my maternal grandfather, and one from my paternal grandfather.
 
I have a 31-1/2 barehead in slick black from the 60's era. It's a favorite. Glad you were able to rescue your grandads knife.
 
Nice Jack knife. Grandpa had a good old fashioned work knife there. Should have plenty of life left in it. My grandfather always carried a Schrade. Sure wish I had it.
 
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