I i$ THE BUTTER INDUSTRY IN UNITED STATES [342 

 REASONS FOR THE ESTABLISHMENT OF BUTTER GRADES 



As a contri'buting cause in the development of grades as 

 applied to butter, the kind of speculation that consists of 

 " dealing in futures " is perhaps almost negligible. In 

 wheat the speculative interests had a large share in the es- 

 tablishment of grades. The " dealing in futures ", so com- 

 mon in the wheat market, made necessary the " contract 

 grades " ; and it was largely because of the speculative 

 motive that the produce exchanges " began to adopt rules 

 to control " x grading. In the butter trade, however, 

 " futures " are very inconsiderable. There is speculation, 

 but it consists mostly in buying the goods outright, placing 

 them in cold storage, and holding them for a rise in price. 

 This form of speculation had considerable influence, as will 

 be seen later. 



The establishment of grades in butter was probably due 

 in large measure to the need for an expeditious method for 

 handling the business on the floor of the exchange. With 

 the establishment of the " call ", which in form is an auc- 

 tion sale, selling by sample becomes out of the question. 

 That method is too slow, and the necessity of carrying 

 about samples not only entails considerable inconvenience, 

 but would amount in a year to a loss that the business could 

 hardly afford. Selling by grade obviates all these objec- 

 tionable features, and makes possible putting through a 

 great number of sales in a short time. Under this method, 

 the grade, quantity, price, and time of delivery, are either 

 stated or understood. The sale makes no reference to a 

 particular lot of goods. The thing that is sold is a parti- 

 cular quality of goods. The purchaser need not be con- 

 cerned about getting his money's worth, because he is pro- 



1 H. C. Emery, Speculation in the Stock and Produce Exchanges in 

 the United States, p. 42. 



