HISTORY OF THE US CIVIL FLAG
The first U.S. Flag, which denoted civilian versus military purposes, was designed in 1799 by Oliver Wolcott Jr. the Secretary of the Treasury under John Adams. Wolcott's proposal featured: An ensign, consisting of sixteen alternating red and white stripes representing the number of states that had joined the Union by 1799; and the Union, represented by the small rectangle in the upper left corner, with its Arms (an Eagle) of the United States in dark blue on a white field.
It is significant that Wolcott’s new civilian flag had vertical stripes, not horizontal. This was done so that non-military ships would be easily recognized and not fired upon as they tried to hail and board foreign vessels. This new flag was actively flown on Revenue Cutters, what we now call Coast Guard Cutters. The original purpose of the Revenue Cutter was to collect tariffs and other taxes that were imposed on foreign goods. The Revenue Cutter ensign had vertical stripes to denote civilian authority under the Treasury Department rather than military authority under the War Department.
The First U.S. Civil Flag 1799
In the early days of our nation, horizontal stripes became the accepted practice for use over military posts, and vertical stripes were used over civilian establishments. The use of the Civilian Flag also spread to Merchants and Common citizens to symbolize their Constitutional rights.
The Civil Flag had red and white vertical stripes with blue stars on a white background. By the Law of the Flag, the vertical striped design denoted Roman Civil jurisdiction within Federal territories rather than Military jurisdiction under Admiralty law. The practice of using the Customs Flag as a Civil Flag became encoded law in 1874 when Treasury Secretary William. A. Richardson required all customhouses to display the Civil Flag.