That sounds like a "carbide cannon" You put calcium carbide powder called "Bang-site" and water in them and they used a lighter flint to set it off. The most popular brand was called a "Big Bang Cannon". Still made today I think by the same company. http://en.wikipedia.org/wiki/Big-Bang_CannonIt really fired. If I remember correctly, you loaded it with a kind of paste that I am guessing was gun powder. Can't remember how it was ignited. Maybe there was a percussion cap too.
I have a couple of fairly rare toy machine guns that were made by the Smiths Welding Company that used 'carbide' to make a bang when shot.Cool stuff!