I think tradition played a big part in how the tests were conducted and it really was a poor way to assess mastery of the material. One professor put it this way: there are about 5% of you that think like your professors, 5% that don't understand the material and the remaining 90% would be just as fairly graded if I took your exams, tossed them across the room and ranked them based on which one went the furthest.
Pass/Fail would have probably been a better way but there is a tradition of having a class rank and everyone being graded on a curve.
