I had several Fender amps like this back in the 60's and 70's when I was a long-haired hippie child playing in a band. You would flip the switch back and forth and feel for the position of least shock (no kidding). IIRC my Kustom 100 also had this same sort of switch on the back. NOTHING was grounded in our backline or PA back then and we were always getting some kind of shock. But that was accepted as normal and part of playing "electric" instruments.
OT but really cool were the Red & Blue jeweled power lights on the front of old Kustom amps. They were visually hard to focus on which made them very easy to recognize from the back of the club.
You were supposed to switch it for least audible hum, it wasn't supposed to give you a (dangerous) shock in either position. I am a little surprised that UL blessed the concept. They surely specified the type caps used for that task.
This has been discussed before but you can cap couple the ground inside the guitar to adequately reduce hum while increasing human safety.
JR