Don Firth - I too am curious as to how they did music in the old days and some of the answers above seem likely; less audience expectation, less competing noise and sometimes very powerful players.   

I've read of an early day banjo contest in the Bowery between two top players - probably similar to what we now call "clawhammer" style - and there were supposedly nearly a thousand in attendance. I'm really curious how they were heard. There was a quick scene of this kind of music in the recent film "Gangs of New York" - showing a black man playing an early skinheaded banjo.

I also saw a reference once about songs in the non-amplified era being sung slower - so there was more time to absorb the meaning.