Some history of the flag of the United States
On 14 June 1777, the Marine Committee of the Second Continental Congress adopted a resolution stating "resolved, that the flag of the United States be thirteen stripes, alternate red and white; that the union be thirteen stars, white in a blue field representing a new constellation." With this resolution, the flag which was to become the symbol of the United States of America had its official origin.
On the other hand, the actual design was not actually finalized. As can be seen, the resolution is far from specific. It doesn't detail how the stars or stripes are to be arranged, nor the placement of the field. It doesn't even state how many points per star. The first Navy version had alternate rows of stars (three and two), others went 4-5-4. Still others put them in a circle (which became known as the "Betsy Ross" flag, though whether she actually originated it is undetermined). Some stars had six or eight points.
It is thought that Francis Hopkinson (who also helped design the Great Seal) was responsible for the stars. For his services, he asked "whether a Quarter Cask of the public Wine will not be a proper & reasonable Reward for these Labours of Fancy and a suitable Encouragement to future Exertions of a like Nature." Being a public servant, his request was declined.
While the colors are a holdover from the United States' association with England, people have attempted to articulate what they are supposed to symbolize. Charles Thomson (Secretary of the First and Second US Continental Congress and one of the first two to sign the Declaration of Independence), in describing the version of the flag and its symbolism on the Great Seal—which he also helped design—said that "white signifies purity and innocence, Red, hardiness & valor, and Blue, the colour of the Chief signifies vigilance, perseverance & justice." (This, of course, postdated the original design of the flag.)
Though many people—notably women—made the early flags, the best known is Betsy (Elizabeth) Ross who supposedly made the first one. Odds are this is apocryphal as the only attestation comes from a paper read by her grandson nearly 100 years later (1870), claiming witnesses to a transaction where Ross was asked make the flag from a drawing by Colonel Ross, Robert Morris, and George Washington. The grandson dates the meeting to June 1776. There is no real confirmation or disputation of this story. Ross did make flags and did so for 50 years.
A precursor to the "Stars and Stripes" was known as the "Continental Colours" or "Grand Union Flag." While it had the 13 horizontal, alternating red and white stripes, in place of the stars on a blue field was "the red cross of St. George of England with the white cross of St. Andrew of Scotland" (like the British "Union Jack"). First flown in 1775, it was still the unofficial flag when Congress approved the final version of the Declaration of Independence on 4 July 1776.
The design settled on the 13 stars on a field of blue and alternating horizontal red and white stripes for a time. But in January of 1794, a new resolution altered the design. By then, two new states had joined the union—Vermont and Kentucky (1791 and 1792, respectively). The resolution changed the flag to 15 stars and 15 stripes. This was the official flag until 1818 (odd, since by the end of that year, the number had increased to 21 with the admission of Illinois). This is the flag that Francis Scott Key saw flying over Fort McHenry, inspiring "The Star-Spangled Banner." It also accompanied the marines to " the shores of Tripoli" and was flown at the Battle of New Orleans.
The bad idea of adding a stripe per state was put to an end in June 1818, when it was decided to go back to 13 stripes, still in honor of the original 13 colonies, and 20 stars—one per state (the stars to be officially added on the following 4 July after admission). This has remained the case and the current flag has had 50 stars since 1960 when Hawaii gained statehood.
While a basic standard had been chosen, the specifics were not set in chosen until an executive order in 1912 which stipulated the proportions and order of the stars (at the time it was six horizontal rows of five pointed stars, one point turned upward). It should be noted that by that time, most flags were about the same design so it wasn't any radical departure from current convention. In 1959, following the admission of Hawaii, president Dwight D. Eisenhower established the current configuration of stars (number per row and the alternating stagger).
In honor of the original resolution, 14 June is designated "Flag Day." It is thought to have originated in 1885 with a Wisconsin school teacher who wished to celebrate the flag's birthday. The teacher actively promoted the idea in magazines, articles, and public addresses, hoping the idea of celebrating a "Flag Day" or "Flag Birthday" on that date would gain support. In 1889, another teacher in New York also promoted the idea and planned celebrations with his students. It was later adopted by the State Education Board of New York and in 1891 the Betsy Ross House held a celebration. The next year, New York's Society of the Sons of the Revolution celebrated this "Flag Day," as well. Similar support and celebrations for this new holiday continued through the 1890s and into the next century.
This led to president Woodrow Wilson proclaiming 14 June as the holiday "Flag Day" in 1916. It remained popular and widely celebrated but was not "official" until 1949, when president Harry S. Truman signed an act of Congress designating the day as "Flag Day." While it is still fairly well observed, it is not a federal holiday.
(Sources: www.pueblo.gsa.gov/cic_text/misc/ourflag/titlepage.htm, www.usflag.org, www.britannica.com)