"Goddard Lieberson, at Columbia, was, of course, the model for a show album producer. From either his earliest recordings or soon thereafter he succeeded in conveying the musical's story, often employing at least the minimum dialogue that helped place each particular song that needed this.'"
Actually, I believe Lieberson's policy was quite the opposite -- to use no dialogue on the cast albums he produced, with few exceptions, as in cases where dialogue is actually part of a song, often underscored. (There are some cases of that in MY FAIR LADY and GYPSY, for example).
I think there are two major reasons for this: (1) Lieberson thought of a cast album as mostly a musical experience, and I believe he said that he felt dialogue on a recording wouldn't wear well on repeated listening; but also (2) cast recordings on vinyl were strictly limited to an hour of music at absolute most, so everything not viewed as essential had to be cut, and they certainly weren't going to cut music in favor of dialogue. This is why, of course, the one huge major exception to his rule was the original cast recording of THE MOST HAPPY FELLA, which was issued complete on THREE LPs.