The .32-40 does use a .320"-.321" bullet diameter. It is the .32 WCF (32-20) which uses the .308" bullet, totally different caliber.

The .32-40 was an old Ballard round as I recall (as well as the .38-55), while the .32 WCF was introduced by Winchester as a black powder round for the model 73 toggle joint lever gun. Colt picked it up as a chambering for their SAA. It was later offered in a high velocity loading for use in the Win Model 92 only, but dropped as too many of them found their way into model 73's & SAA's.

The .38-55 & .32-40 were straight & tapered versions of the same basic brass. The later .30 WCF (.30-30), .25-35 & 32 Win Special were all based on this same case.

Miller/TN
I Didn't Say Everything I Said, Yogi Berra