[Ron Ramirez]

It was, I believe, a combination of factors. One was sealing the components in high temperature wax which was thought at the time to make the condensers (and the occasional resistor) inside impervious to moisture. Time has proven this to have been false, as the old paper capacitors go bad whether they are sealed in a Bakelite block or in a cardboard tube. Another, the bakelite blocks provided convenient tie points for wiring. Another thought - early on (mid 1930), their use helped keep their circuit designs somewhat of a mystery unless one had access to schematic diagrams. Of course, thanks largely to the work of John F. Rider who published his Perpetual Trouble Shooting Manuals, schematic diagrams for many radios became more widely available to the servicemen of the day around 1931.

Oh, and that is not a dumb question. The only dumb question is the one which goes unasked.