120 THE BUTTER INDUSTRY IN UNITED STATES [344 



depress the whole butter market. The absence of sys- 

 tematic grades as a cause of the depression of all butter 

 prices, was seriously felt in 1874, 1 when the Butter and 

 Cheese Exchange 2 adopted the plan of grading butter as 

 extras, firsts, seconds, and thirds. At this time quotations 

 were commonly based upon grades indicated by such loose 

 terms as " good to prime ", " fair to good ", " poor to 

 fair ", etc. There was a wide range of quality that would 

 fall under these terms. And there was a general tendency 

 for the ruling market price that became attached to the 

 " good " quality to attach itself also to " prime ", and in 

 general, for the lower grades to have a depressing influence 

 upon prices of the best class of goods. It is complained at 

 this time that an accumulation of a poor stock of goods de- 

 presses the entire market due in large part to the lack of a 

 definite system of grades by which prices are allowed to 

 " descend in a regular gradation from prime to poor ". 

 The Butter and Cheese Exchange was in position to take 

 action in this matter. By parliamentary methods it could 

 not only adopt the grading system and enforce its use on 

 the floor, but in giving prices to the press it could make 

 the grades the prevailing trading basis throughout the whole 

 trade. With this kind of market machinery it became pos- 

 sible to establish direct relations between the different quali- 

 ties of butter and the demand for these qualities. Prices 

 for the different grades were allowed to adjust themselves 

 according to the conditions of supply and demand of the dif- 

 ferent grades. And a fall in the price of the poor stock 

 could no longer unduly depress the whole market. 



1 Review of the butter trade by the Urner-Barry Co. in the Report 

 of the New York Chamber of Commerce for 1874, p. 89. 



2 The name of this Exchange was changed to the American Ex- 

 change of New York in 1875, and to the New York Mercantile Ex- 

 change in 1882. 



