[cpollock]

Thanks!  I always learn a lot from this phorum.  I got the 38-7 running today, and I noticed for the local AM stations (all 3 of them in this area) the antenna did not make a lot of difference. I suspect the house wiring is acting as some form of antenna and those caps are helping.  But who knows...in my experience RF and HV (20kV and above) both seem to operate with rules that are not obvious to most us, so exactly where the signal is coming from is anyone's guess.  However, the antenna definitely helps on the shortwave band. 
I'm leaning toward putting the chassis back in its cabinet with the caps as shown in the schematic (if it was good enough for Philco, it should be good enough for me), and let this issue rest.  I'm glad to have it working again.  
Now... on to my 41-300.  

Again, thank you for all the information, I really am enjoying learning from everyone about these radios.