Just a guess, but possibly an aftermarket alarm system?
I recently purchased an '81 300TD and I noticed a small toggle switch under the dash, just a few inches from the e-brake.
I also have a little red light on the top of my steering column...not sure they are connected but I have no idea what else it would do.
I took the dash panel off only to find that there is one heck of a mess of wires that go to nowhere...
Under the hood I have a small bull-horn looking thing mounted on my left fender with wires going thru the firewall and into the cabin. Not entirely sure that it was an alarm, maybe an external PA system? (but no evidence of a CB mount anywhere...)
Just a hunch!
Current: '91 300TE 4MATIC 317k and climbing...
'81 300TD Wagon 168K "Tank"
'83 240D 216K 4spd manual "Da Bear" (aka best car ever)
"Never sweat the petty things...
and never pet the sweaty things."