Not good is an understaement, with many solvents known carcinogens of the worst kind, and sadly, they are often abused as "inhalents" by teens, sometimes with fatal results.
By the way, many of these knives are indeed worn thrust through the sash like the typical jambiya, while some scabbards have rings and are worn as we would wear a belt knife, usually with ornate fabric baldrics.
To "restore" these for dispaly you can get curtain tie-back ropes in many better fabric stores that often have an elaborate knot on the ends, much like the originals and with a very impressive end result.
Mike
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