The Sons of Liberty Flag, adopted in 1767 originally had 9 strips that on some flags were horizontal and on others vertical. One story explaining the origin of the stripes is that they represented the nine states that attended the Stamp Act Congress in 1765 - a meeting of colonial leaders whose purpose was resistance to the Stamp Tax. We tend to portray the Sons of Liberty as heroic characters but this was not always the case. It was an underground resistance group lead by artisans and craftsmen but its masses were from the poor and disenfranchised. In those days a person could practically hire a riot by promising a roasted ox and a keg of rum, but once started, a riot is hard to extinguish. Our early American leaders knew this and also that mass loyalty is fickle and can easily turn. Many times a crowd went too far in its lawless destruction and the American Cause suffered from it.
The Continental Colors, was a combination of the British Red Ensign with the American Sons of Liberty's flag. (Some historians would argue that it was a copy of the British East India Tea Company's flag with slight variation). It was supposed to represent a still loyal American populace to British law, customs, and Britain itself if the American demands could be met. The first reference to this flag was when John Paul Jones supposedly flew it on his ship in December of 1775. This is also the flag that George Washington raised on Jan. 1, 1776, after taking command of the American militiamen in Boston. The Continental Colors would have been the one flown at the time of the Declaration of Independence later that year in July. This flag is considered the first true flag of the United States.
Having declared independence July 2, 1776, the Americans hurriedly sought allies for their war against Britain - among these were the American Indians. The most powerful were the six tribes of the Iroquois Nation which were anti-American and loyal to the King thus causing a grave threat. The Americans sought to break this centuries-old Indian alliance by courting the Oneidas with gifts and great promises. An Oneida delegation visited Congress in Philadelphia and when leaving asked for a flag that they might raise to show their American friendship. This request prompted Congress to pass on June 1, the Flag Act of 1777, creating a uniform flag for the United States (there were still many variations in use at that time). It stated: "Resolved, That the flag of the United States be made of thirteen stripes, alternate red and white; that the union be thirteen stars, white in a blue field, representing a new Constellation."
One important aspect of the Flag Act is that it contained no declaration regarding the constellation of stars, thus you will see many variations of the early flag. Most people view this flag as the "Betsy Ross" flag which has become an urban myth unable to be debunked.
The original American flag was created by a delegate to Congress and signer of the Declaration - Francis Hopkinson of New Jersey. He submitted a bill to Congress for his efforts and was denied being told he was already paid enough for his services as a member of the Congress. (Try to imagine that happening today!) The perpetual "Betsy Ross Myth" was created in 1870 when her grandson, William Canby, wrote a book containing the fanciful story and the rest as they say - is history. She was indeed a seamstress and flag maker in Philadelphia and did make American flags but so did many others in the country.
Another note: Most Americans associate this flag with the Declaration of Independence though it was not created until almost a year later. This is mostly due to two historically incorrect paintings.
1. "Washington Crossing the Delaware" which was painted by German artist, Emanuel Gottlieb Leutz in 1851. Washington crossed the Delaware on December 25, 1776 and this flag did not exist at the time.
2. "The Spirit of 76" which was painted by Archibold Miller, an Ohio artist, for the Philadelphia Centennial Exposition celebrating 100 years of American Independence. Again, this flag did not exist in 1776 though to the artist's credit, the painting was originally called "Yankee Doodle" and later dubbed "The Spirit of 1776" by the American public.
In the beginning, as a new state was admitted to the country, a new star and a new stripe would also be added. This would eventually create design and proportion problems so in 1818 President James Monroe signed an act declaring that henceforth our flag would have 13 stripes and a new star for each state of the Union.
Contrary to another popular myth - the colors of our flag have no meaning.