My guess is that this is actually a transformer-coupled oscillator. The sliding short changes the inductance of the transformer, which is connected to invert the plate signal, thus producing positive feedback when connected to the grid. I think maybe the ground at the end of the transformer is theoretically not required, but serves to equalize stray capacitances on the input and output sides that don't show explicitly in a schematic. How's that for a guess?
http://en.wikipedia.org/wiki/Meissner_oscillator