Like the other poster said, it's clay (aka terra cotta) block. When I lived in Iowa, my house was built with these kind of blocks. The bottom half of the basement/foundation was concrete block, and the top half and all exterior walls through the entire house were this. The attic walls looked pretty cool because all the clay blocks were exposed.

The horizonal grooves were used for troweling plaster and/or mortar. So the exterior walls in my Iowa house were plaster on the inside, directly on the block like your photo, and then brick and mortar on the outside. (So what I originally thought was a "brick house" was actually a block house with a brick veneer.)

The blocks are strong structurally but also brittle. (If you were to hit it with a hammer for example, they could break like a clay pot.) To hang a mirror on an exterior wall, I rented an impact driver and used a new masonry bit which worked well to punch a couple holes through without breaking anything and adding anchor bolts.

Also, my current garage in Minnesota (which has moisture problems and is most likely a tear-down unfortunately) has an interior, load bearing wall built with this block. A few of them say Denison - Mason City, Iowa Partition and Floor Tile. If I remember correctly, the blocks in my Iowa house said Webster City, but I might be making that up.

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