Vintage German Gnome Thingy

Another vintage German gnome from my collection is this ceramic piece, made in Germany circa the 1930s.

Measuring 5 inches long, the tiny, smoking gnome is flanked by two hollow "tree stumps." I'm not quite sure what purpose these served: perhaps they originally held salt and pepper shakers (I'm guessing mushroom shaped ones) or they're meant as planters for small flowers?