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The History of the Stars and Stripes
The Stars and Stripes originated as a result of a resolution adopted by the Marine Committee of the Second Continental Congress at Philadelphia on June 14, 1777. The resolution read:
"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. "
Strong evidence indicates that Francis Hopkinson of New Jersey, a signer of the Declaration of Independence, was responsible for the stars in the U.S. flag. At the time that the flag resolution was adopted, Hopkinson was the Chairman of the Continental Navy Board's Middle Department. Hopkinson also helped design other devices for the Government including the Great Seal of the United States. For his services, Hopkinson submitted a letter to the Continental Admiralty Board asking "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." His request was turned down since the Congress regarded him as a public servant.
Source: Federal Citizen Information Center