
The first Flag Act of 1777: Birth of Our Nation’s Flag
The Flag Act of 1777 (Figure 1. “Journals of the Continental Congress, 1774–1789, 8:464”.) was passed by the Second Continental Congress on June 14, 1777, in response to a petition made by an American Indian nation on June 3 for “an American Flag.” As a result, June 14 is now celebrated as Flag Day in the United States.
The first Flag Act of June 14, 1777, only provided:
Resolved, That the flag of the thirteen United States be thirteen stripes, alternate red and white; that the union be thirteen stars, white in a blue field, representing a new constellation.

The specific intent, if there was one, in just how these stars were to be arranged is unknown. The members of Congress probably had no thought or desire to regulate this feature. The design, how the flag is put together, and the fabrics to be used were not provided by this Flag Act.
Sources
Cooper, Grace Rogers (1973). Thirteen Star Flags. Smithsonian Institution Press. Available online (21.7 MB)
The History of Our American Flag