According to some quick research, the letter grading system in the US was born in the late 1800s at Mt. Holyoke College where they developed and used an A-E scale (there was no F yet) to evaluate students. In the early 1900s, the grading scale was used widely in colleges and universities with the change from E to (some crazy students misunderstood the E to mean Excellent, so it was replaced with F for Fantastic- no, actually for Failure. The scale was widely adopted in k-12, colleges and universities in the 1940s and we're still living with it today.
Simply, the scale was created as more and more students were allowed to and began applying to secondary school and "pass" "fail" no longer sufficed as the gatekeeper to college. By creating a hierarchical scale, students could be viewed, sorted and classified with ease and decisions on acceptance simplified. I'd argue the scale was created more to keep some people out of secondary education, rather than widening the doors to acceptance...
And so now students, teachers and families alike are left to make sense of an A-F system to measure achievement that without context does not promote growth or learning. And last but not least, a letter cannot fully encompass who a student is or what a student knows or understands. Without context, the system simply classifies students into arbitrary and seemingly immovable categories (A student, C student) that can have a profound impact on future opportunities and experiences.