Grand Union Flag is the first national flag of the United States of the America. It is also known as also the Continental Colors, the Congress Flag, the Cambridge Flag, and the First Navy Ensign. It had 13 red and white stripes with the British Union Flag, national flag of the British Union which was current at the time (prior to the inclusion of St. Patrick's cross of Ireland), in the canton. It expressed the thought of the times and the political situation in the colonies, which at that time still acknowledged their allegiance to Great Britain. Idea was to show sign of colonial allegiance to the crown while maintaining the rights of the United Colonies.
In the year 1775, first year of American War for Independence, creation of navy was approved by the Continental Congress and new ensign was required that would represent the Congress and new nation, and be different enough from Red Ensign flown by British vessels which was red flag with British Union Flag in canton. It is not known for certain when or who designed the Continental Colors but it is known that it was hoisted for the first time on the USS Alfred, man-of-war in the Continental Navy of the United States, in Philadelphia, Pennsylvania on December 2, 1775, by Lieutenant John Paul Jones. The Grand Union Flag was used between 1776 and 1777 by the American Continental forces as an ensign and as a garrison flag. It is believed that the flag was raised by George Washington's army on January the 1st 1776 at Prospect Hill in Charlestown, near his headquarters at Cambridge, Massachusetts, (because of that called the Cambridge Flag,) and that the flag was interpreted by British observers as a sign of surrender. Some historians think that it was British Union flag that was hoisted. Grand Union flag is similar to the ensign of the British East India Company that company used since 1707 until it changed it into design with Union Jack (although ensign of the British East India Company didn’t have standard number of stripes and had between 9 and 15 stripes on its ensigns). It is not known if ensign of BEIC inspired Grand Union flag or not. There are ideas that striped part of the flag was inspired by Sons of Liberty/Rebellious Stripes flag adopted about the time of the Stamp Act Congress in 1765. It was made from red and white stripes that represented united colonies at the time and have perfect sense as a combination with the British Union Flag to represent political ideas at the time. In 1977, “Flag Act” approved design of a new national flag that will replace Grand Union Flag. That flag would have 13 red and blue stripes and 13 white five-point stars (“a new constellation”) on the blue field in the canton instead of the flag of the British Union. Both stars and stripes symbolize 13 British colonies that declared independence from the Kingdom of Great Britain and became the first states in the Union.