Yale may have been the first university in the United States to issue grades, with students in 1785 receiving the Latin equivalents of best, worse, and worst. Prior to that time, U.S. colleges employed the Oxford and Cambridge model, in which students attended regular lectures and engaged in a weekly colloquy with their proctor, in writing and in person. The students were determined to have completed the course when the proctor, and sometimes a panel of other professors, decided they had demonstrated an adequate mastery of the subject. There was no grade. The only way for a potential employer to compare students' credentials was on the basis of letters of recommendation.
via slate.com