From the information you gave, there is a very strong chance that the pick-up cartridge is bad. These old crystal cartridges fail over time and most of the crystal cartridges from the 78 rpm era are dead by now. To confirm, set the selector switch to the phono position and turn the volume all the way up. Then, touch the positive cartridge terminal with your finger. If all is OK, you will hear a loud hum coming from the speaker and this will confirm that the cartridge is bad.
For a new cartridge, you have some options.
The first, and easiest, option is to have the original crystal cartridge rebuilt. I've used a company called west-tech services to rebuild some 78 rpm cartridges for me and they do good work. The rebuild and a new stylus will be around $55. The advantage to having the old cartridge rebuilt is that you will be able to keep the original design without having to possibly modify the tonearm to accept a modern cartridge.
The second option is to install a current production 78 rpm ceramic cartridge. This is the cheapest method; but, may require modification of the tonearm to get around mounting issues and tracking weight issues. www.thevoiceofmusic.com
sells a 78 rpm cartridge kit for around $30 that should work OK. Or, you could install an Astatic 89T powerpoint plug-in cartridge/needle combination.