I live in St. Louis, MO, but love the north east. In fact my cousin lives in Pittsfield, MA and I visit there every opportunity I get. While reading a book that my son-in-law gave me for Christmas, I found myself engrossed in the history of how quilt competitions began. The book is titled "America's Glorious Quilts", if you are interested.
In the early 1800's, the Merino sheep was being introduced in the USA. A county fair was organized to introduce the sheep. This fair took place in Pittsfield, MA in 1807. The fair was sponsored by the Berkshire Agricultural Society and was directed toward men only. However, women came with their husbands to the event. The organizers quickly realized they needed something for the women to do while they were at the fair. Thus they organized competitions in cooking and needlework.
The clergy of the area did not immediately take to the idea of women's involvement in the fairs. Especially since their exhibits were displayed in a local tavern. In fact, the winners would not accept their prizes because they feared reprecussions from the clergy.
Elnaeh Watson, the fair's organizer, finally coaxed his wife into inviting the local women to participate in the fair (1811) by guaranteeing she would distribute the prizes personally. The clergy softened and finally decided they saw no harm in the fair and its competitions.
It is not certain when quilting became a part of the competition. However, records in Kentucky are the first recorded quilting competitions. As in Massachusetts, the Kentucky county fairs were established to introduce the Merino sheep. It was at these fairs that the quilting competitions took place.