So crudely made that it could not possibly have been intended for use, perhaps this toy lathe was designed to accompany a model railway layout. There have been several older makers of lathes and other machine tools intended for that purpose, while others were also produced as miniature, working machine shops - including examples by Tekno, Bing and Knapp.
The Bing, in particular, was once very popular and sold widely and, on the lathe below, the knurling marks inside the headstock V-pulley do look similar to those on the lovely little backgeared and stand-mount Bing shown here.
Other makers produced what might be termed "working models" - some rather more "working" than others -  amongst which were the well-known and lovely Manson, the amusing Arcade, the once-popular Adept,  the more recent Dremel and, of course, the redoubtable Winkle Cincinnati Modelmaker 
Discounting, of course, those tiny precision lathes made for watchmakers, there comes a point where the lines are blurred and a clear classification is difficult. Can a small machine be denigrated as just a "working toy" or is it really something more serious and genuinely useful? For example, how would one categorise such as the Waco, the Goodell-Pratt range and the long-lived and highly successful Emco Unimat?