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No wires were connected to this component when we removed the column from the car. What is it and what does it do?

 

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What does this do?

Certainly looks like a neutral / backup switch . If this is out of an automatic car then that would be right.
 

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I believe it's a green/orange 2 wire harness for the neutral safety switch and it must have a jumper installed or the wires are tied together else the car wouldn't start. I'm guessing your car will start in any gear and you have no back up lights (before you took it apart anyway). Pretty easy fix if you want to get it all working right. I took mine apart and fixed the wiring a while back and now it's right.
 

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If your car is a console shift, or a four speed, then most likely the column has been swapped out for one out of a column shifted automatic car. They just didn't take off the neutral safety/backup light switch.
 

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This is no doubt the automatic steering column that you were going to grind the shifter off of, to make the car a floor shift. So yea, that's a column shifter neutral safety switch that you can get rid of, now that your floor shifter should have one instead.
 

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What year is the car?
Starting with the 1969 model year, GM had a reverse "back-lock" linkage on manual transmission vehicles. This linkage connected the reverse lever on the transmission to the switch you have pictured. IIRC, it served a dual purpose:
1. turned on the back-up lights when the car was put into reverse
2. allowed the ignition switch to be rotated to the "Lock" position only when the transmission was in Reverse.

There was a bell-crank and rod linkage from the reverse lever on the transmission to the lever (below the floor) on the column to make the system work properly.
Many cars have had the system removed over the years.
 
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