I've seen so many warnings about these old wax coated paper capacitors
in these newsgroups, and on the web, that every time I see one of them
now, I begin to shudder.

Immediately, I notify the FBI, telling them that there is a wax coated
paper capacitor in my radio, and I know that this thing is deadly. I
carefully explain to them that I have been exposed to it, and instantly
developed capacitor cancer. I also explain that I have heard of entire
cities being reduced to rubble, killing everyone within 100 miles, when
these caps explode. Then I ask them to come remove the capacitors for my
and everyone elses safety.

Yes, I was just joking in this previous paragraph.......

Seriously, I have not been able to find any answers to what actually
happens internally to these caps, which causes them to fail. I googled
for an answer, specifically used the word PAPER CAPACITOR, but all I get
are results for failing electrolytic caps, which I do now clearly
understand what occurs with them.

So, lets say I have an old radio from the mid 1950s. It contains 9 paper
capacitors (plus a few electrolytic filter caps). I am repeatedly told
that I must replace all of these wax coated paper caps, as well as the
dried up electrolytics.

Ok, I know the electrolyte has dried up in these electrolytics and they
are no longer filtering the rectified DC voltage in the power supply,
which I can quickly identify by the 60 cycle hum coming from the
speaker.

Then, I am told I must replace all these smaller wax covered paper caps,
which may or may not be working at the moment. Great, I can take this
advice and I can change them, but it seems that no one (at least not on
the web), can seem to explain what occurs inside of their waxy bodies
that make them fail.

I know they are quite simple. I roll of paper, and two layers of tin or
aluminum foil, with leads attached to the two layers of foil inside.They
are rolled up, with their leads exiting their bodies. Then they are
given an outer shell of paper with their identity printed on it, and are
then coated with wax. I'm sure that if I had a lot of time to waste, I
could even make my own paper caps, but for the low cost they sell for,
that is not necessary, other than for an experiment.

Knowing how they are built, I can only fathom three possible reasons
that they fail.

1. The leads tend to corrode from dialectric corrosion, where they
contact the inner foil. (I have read that moisture can and does enter
these caps, even with the best wax coating).

2. Voltage arcs burn across the paper layer, arcing between the two
layers of foil, and burn a hole into the paper, which allows the two
layers of foil to contact each other, and cause a short circuit.

3. The foil itself decays from age, and loses conductivity in parts or
all of it's roll.

* This does not take into account physical damage, such as crushing or
poking a hole in a cap body.

What else can go wrong on such a simple device?

*NOTE: I mentioned the wax coated paper caps, but am aware the old
plastic coated ones such as the ones called "Bumble bees" (with colored
stripes) are just as bad.

Honestly, I find it hard to comprehend how moisture can get past that
wax, as long as the wax remains intact, but I'll just take the advice
from the experts on that note.

One final question: Does anyone know what kind of wax was used on them?
Was it bees wax, paraffin wax, or something other?