Gord - the heater you have is the most basic version that was frequently installed by the dealer if a heater was wanted - the same from at least 47-59 - the way you found it is the way they were, as said, "recirculating" heater [I've got a bunch if ya need parts

- freebie, not an ad!]
the water flow valve [called a 'Ranco valve', and common to nearly all manufacturers] was on the deluxe heater, which was an option installed at the factory and had a thermostatic capilary tube so you could 'set' the temp and it could automatically keep it at that level - they almost always start to leak in fairly short order, so it's wise to mount it on the engine side of the firewall!!
I just got in the 'repair kit' from Balkamp for the Ranco in my TF deluxe heater [just the rubber flapper from inside the valve, and the instructions to dis/re-assemble it!] and put it all on the bench for tomorrow

not sure I'll put it in the stock position inside the heater housing tho'
Bill