became public and such sales as are there made are truly market prices. The wholesale dealer in making a contract for butter need not stipulate a certain price at which he will take the goods, but can contract to receive the goods at the exchange price, below it, or to pay a premium. It will be observed that in this way a great deal of risk in the wholesale trade has been eliminated. Obviously on a commission basis the dealer takes no such risk, but, as will be pointed out in the next chapter, very little business is now done on a pure commission basis.

The benefits that accrue from the system of grading of course extend to the other class of dealers the jobbers and retailers as well as to the producer; because out of grading, together with the organized market, the means of communication, and the press, there is established every day, a price, that is in harmony with the actual conditions of supply and demand. These benefits, in importance to society, are comparable to improvements in the field of production.

CLASSIFICATION AND GRADES

In the standardization of butter the trade makes use of two distinct steps. The first is known as "classification" and the second as "grading". Both are classifications with regard to quality. The first step, known in the trade as "classification", aims to segregate large quantities that have a tendency to be more or less alike, or in a general way bear the marks of a distinctive character. The New York Mercantile Exchange classifies butter, according to rules issued October 1, 1914, into Creamery, Process, Ladles, Packing Stock, Grease Butter, and Known Marks. The second step, known to the trade as grading", goes into greater detail, and divides the above "classifications" into grades. These "grades ", in use by the New York Mer

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cantile Exchange, are Extras, Firsts, Seconds, and Thirds. It is clear that grading is a scientific classification according to quality. This step brands the pound, or unit of consumption, with a specific quality. While in the first step the classification is also made with regard to quality, the object is only crudely attained. It is a division of the supply into large lots or classes, the quality applying merely to the class as a whole and not to its units singly. Some Process butter may be as good or better than some Creamery butter. But as a class, Creamery butter is better than Process. That demand recognizes this difference of class quality, is shown by the difference in the following prices of the best grades in each of the "classifications":

.29@.30% .25 @ .26 .27 @ .28 .22% @ .23% .19% @ .20 .17% @.18

The

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(From the New York Times, Mar. 16, 1915.)

classifications" and "grades " and "grades" are, as previously stated, determined by organized markets. In Elgin, they are determined by the Elgin Board of Trade; in Chicago by the Chicago Butter and Egg Board; in New York by the New York Mercantile Exchange; in Boston by the Boston Chamber of Commerce. There is a disposition among all these bodies to conform to a common practice in this matter of establishing "classifications" and "grades". The reason for the tendency toward uniformity is not to be explained, however, merely as a result growing out of motives of the trade; such as improved trading facilities, or the establishment of prices that have the same significance in all markets; but must be explained on the ground that the terms specifying "classifications" and "grades" must always

truly characterize the supply. Conditions in the field of production, including transportation and cold storage, always determine the class terms used in the trade. "Grades" are not as closely related to production as "classifications", but are nevertheless largely conditioned by it, because it is the range of quality in the supply that determines the number of "grades" and the range of points to be assigned each grade.

THE EVOLUTION OF CLASSIFICATIONS

An historical study of the trading rules adopted from time to time by produce exchanges, and a review of press quotations, reveal changes in class terms that are almost parallel with changes in production. Of course the change in production necessarily always precedes the change of the class terms in the trading rules of exchanges. The press1 in many parts of the country, however, is frequently delinquent as to the adoption of the terms used officially. There is great variation in the use of grade terms in the daily press, and a study of press quotations alone shows only vaguely the intimate relation of "classifications" to the history of production.

The history of “classifying" butter may be divided into three periods. In the first period butter was classified with regard to its maker; in the second with regard to geographical producing areas-first, a small locality, then, a state, and after this, groups of states, as Eastern or Western; in the third with regard to its process of manufacture.

Before the days of the big markets that have developed concurrently with our big cities, classifying and grading butter was a very simple process, and indeed of little con

1 This cannot apply to publications of the type of the New York Produce Review and American Creamery, published by the UrnerBarry Co.

sequence. Then, butter was consumed where it was produced; and the distributing process, now of such tremendous importance, was not a factor. For buying and selling was among neighbors or through the grocer of the town. In many cases the consumer knew the producer personally. He knew the habits and personal characteristics of the dairywoman, and could form a close estimate as to the type of butter that she would be likely to produce. And of course a number of trials of her butter would stamp it finally with its own peculiar quality. When this close relation between consumer and producer no longer existed by reason of the growth of the town, there was still a tendency to identify the butter with its maker. In New York City as late as 1858, according to a statement made by the New York Tribune and reprinted in the Ohio Agricultural Report1 for that year, butter in many cases was still associated with the maker, "some dairies bringing two to eight cents per pound more than others from the same neighborhood" because of " the difference in quality resulting from different degrees of skill and care in the makers". And even to-day the "classification ", known to the trade as Known Marks, is based on the same idea. For instance, the quality of the butter manufactured by the Strawberry Pt. Creamery of Strawberry Pt., Iowa, is generally known to the trade, and the name of the maker is synonymous with a specific quality. There are a number of such manufacturers who have won a reputation for uniformity of a specific quality,and whose product is thus enabled to be sold under a Known Mark. The basis of the identity of the maker is still used in sections of the country remote from towns of any size, and much of the farm-made butter, by reason of the fact that it is largely consumed in local mar

1 P. 299.

kets, is still bought and sold on the basis of the identity of the maker.

Before the days of dairy associations, butter-making was not only entirely domestic and therefore extremely individualistic, but there was no organized means of putting into general use the best methods then known, and as a result there was a general lack of uniformity in the quality of the product. There was no common factor in different lots of butter. Each lot was itself a class. Obviously under these circumstances the only basis for classification was the association of the butter with its maker.

As butter was produced more and more for the market instead of for local consumption, certain localities developed exceptional skill and uniformity of method. This meant that the product from one of these localities was stamped with a peculiar quality throughout its whole extent. Examples of such localities in dairy history are Orange County in the State of New York and Franklin County in Vermont.

Before 1840 very little of the butter from Franklin County went to Boston, but practically all its surplus butter, together with cheese and dressed hogs, was taken to Montreal. With the completion of the Vermont Central and Vermont & Canada railroads in 1850, Boston began to seek the butter of Franklin County. In 1854 the Vermont Central railroad began running its butter cars supplied with ice through the county, the town of St. Albans becoming a very important shipping center for Franklin County butter.1 From this time to the advent of the creamery, Franklin County butter served as a standard for quality in Boston. What was true of Franklin County was perhaps more pronounced in Orange County. This county sent its butter

1 Vermont Agricultural Report for 1872, pp. 158, 159.