The earliest and only suggestion of the stars as a device for the, American ensign prior to their adoption in 1777, I have been able to find, is contained in the Massachusetts Spy for March 10, 1774, in a song written for the anniversary of the Boston Massacre (March 5).
In a flight of poetic fancy, the writer foretells the future triumph of the American ensign thus:
A ray of bright glory now beams from afar The American Ensign now sparkles a star Which shall shortly flame wide through the skies.”
The supposed earliest instance of the thirteen stripes being used upon an American banner is found upon a standard said to have been presented to the Philadelphia troop of Light Horse in 1774-75, by Capt. Abraham Markoe, and still in the possession of that troop, and displayed at its anniversary dinners.  As Gen. Washington, when en route to take command of the army at Cambridge accompanied by Generals Lee and Schuyler, was escorted by this troop of light horse from Philadelphia, June 21, 1775, to New York,  he was doubtless familiar with the sight of this standard, and it is possible that it may have suggested to him the striped union flag he raised at Cambridge six months later.
The first continental congress assembled at Philadelphia, Sept., 1774, and on the 17th of November following, twenty-eight gentlemen of the highest respectability and fortunes voluntarily associated, and constituted themselves the Philadelphia troop of light horse, and elected Abraham Markoe captain. The uniform they adopted was a dark brown short coat, faced and lined with white; high topped boots; round black hat, bound with silver cord; a buck’s tail, housings brown edged with white, and the letters L. H., worked on them. Their arms were a carbine; a pair of pistols and holsters; a horseman’s sword; white belts for the sword and carbine. Such was the appearance of this troop when it accompanied Gen. Washington to New York, and afterward fought under its standard at Trenton and Princeton.
Capt. Markoe resigned his commission in 1775, in consequence of an edict of the king of Denmark, which forbade his subjects to engage in the war against Great Britain, under penalty of confiscation of their property,  and if he presented this standard to the troop before his resignation, and it was their first standard, this would fix the date of its manufacture between 1774 and ‘5, and prior to the union flag raising at Cambridge. For this reason this flag is considered a relic of priceless value by the troop to which it belongs.
History of the Philadelphia Light Horse Flag
For the following accurate and minute description of this interesting revolutionary relic I am indebted to Mr. Charles J. Lukens, of Philadelphia: 
“The Philadelphia Light Horse flag of the Light Horse of Philadelphia is forty inches long and thirty-four inches broad. Its canton is twelve and one-half inches long and nine and one-half inches wide. The armorial achievement in its centre occupies the proportional space shown in the drawing ; both sides of the flag exhibit the same attributes. The left side shows everything as if the material were transparent, giving the right side entirely in reverse, except the cyphers L. H., and the motto: ‘For these we strive.’ The cyphers, the running vine on both sides, the cord and tassels, and the fringe are of silver bullion twist. The spear head and the upper ferrule, taken together eight inches in length, are of solid silver. The staff is of dark wood, in three carefully ferruled divisions screwing together. Ten screw rings at irregular intervals from two and one-half to three and three-fourths inches, are used to attach the flag to the staff by means of a cord laced through corresponding eyelets in the flag.
“The Philadelphia Light Horse flag is formed of two sides very strongly hemmed together along the edges, each side being of two equal pieces attached together by means of a horizontal seam, the material of the flag being a light bright yellow silk, and apparently the same tint as that of the present artillery flag of the United States. The canton of the Philadelphia Light Horse flag is ‘Barry of thirteen azure and argent.’  The azure being deep ultra-marine, the argent silver leaf. The achievement in the centre of the flag is: Azure, a round knot of three interlacings, with thirteen divergent, wavy, bellied double foliated ends or, whereof two ends are in chief, and one in base as per margin. The scrolled edging of the shield is gold, with outer and inner rims of silver.
“Crest, [without a wreath] a horse’s head bay, with a white star on the forehead, erased at the shoulders, maned sable, bitted and rosetted or, and bridled azure. Over the head of the charger is the monogram L. H. 
“Beneath the shield, the motto ‘For these we strive,’  in black Roman capitals of the Elizabethan style, on a floating silver scroll, upon the upcurled ends of which stand the supporters, DEXTER, a Continental masquerading as an American Indian (probably of the Boston tea party, Dec. 16, 1773), with a bow or, the loosened string blue floating on the wind, in his left hand, and in his right, a gold rod upholding a liberty cap,  with tassel azure, the lining silver, head dress and kilt (or ga-ka-ah) of feathers, the former of five alternately of dark red, and gold, with fillet of crimson. The latter of seven alternately of gold and of dark red. (This may be of eight, and then it would be 5-8-8=13, alternately of dark red, and of gold, as the gold at least occupies the extreme natural right of the kilt. The uncertainty arises from age, and the fact that the dependent ends of a crimson shoulder sash or scarf worn from left to right with knot at the waist bound the left edge of the kilt, which itself is supported by a narrow girdle, with pendant loops of gold, and the looped spaces red. The quiver is of gold supported over the right shoulder by a blue strap: its arrows are proper. A continental officer’s crescent, gold, suspended around the neck by a blue string, rests just where the clavicles meet the sternum. The mocassins are buff with feather tops, I think alternated dark red, and gold. The Indian has deep black hair, but his skin is intermediate between the Caucasian and the aboriginal hues, rather inclining to the former, and his cheek is decidedly ruddy, almost rosy. He approaches the shield in profile as does also the SINISTER SUPPORTER which represents an angel of florid tint, roseate cheek, with auburn curly hair, and blue eyes, blowing a golden trumpet, with his right hand, and holding in his left a gold rod. His wings are a light blueish gray with changeable flashes of silver. His flowing robe from the right shoulder to the left flank is purple. These supporters not being heraldic in position and motion for human or angelic figures, their left and right action have the natural and not heraldic significations.
“This flag is in admirable condition considering that nearly one hundred years have elapsed since it was made. The whole is a model of good taste and judgment, and evidences that Captain Markoe spared no expense.”
It is to be regretted, the precise date of the presentation of this banner, and the origin of its devices cannot be ascertained. It seems remarkable an event so important is not found chronicled in the Philadelphia papers of the time. 
A lithograph of this flag, giving a fair general idea of its appearance, was published in the Military Magazine, printed by Wm. Huddy in Philadelphia, in 1839. The picture is accompanied by the following lines written by Andrew McMakin which are dedicated to it:
FAME AND LIBERTY.
“No trophy doth ‘the earth conceal
To Freeman’s soul more truly dear,
No conquest of the ensanguined steel
A Freeman’s heart like this can cheer:
‘For these we strive? each burnished sword
With ardor struggles to be free,
And in the foremost ranks would guard
Our spotless FAME AND LIBERTY!
Unfold the banner to the light
And let its blazonry appear,
Unmarr’d by black oppression’s night,
Unshaken still by craven fear ;
‘For these we strive‘ — a potent charm
To conjure forth the brave and free,
To warm the heart and nerve the arm
That strikes for FAME and LIBERTY!
‘For these we strive;’ what brighter name
Can man achieve or beauty see,
Than WORTH to share his country’s FAME,
Or PERISH for her liberty!
Behold its gleam along the sky,
A seal of hope, a promise given
That ‘neath its folds who justly die,
Shall win a recompense in Heaven.”
On the semi centennial anniversary of the troop, Nov. 17, 1824, this banner was displayed; when David Paul Brown being called upon for a toast gave impromptu:
“For fifty years at fray or feast
O’er deadly foe or gentle guest
And FIFTY more, our flag shall wave
In memory of the Good and Brave
Who dignified the world;
And tyranny and time defy
In freedom’s immortality.”
Mr. Lukens considers this flag to bear intrinsic evidence of having existed before the invention of the star spangled banner “because it has no stars save a white star in the forehead of the horse-head used as a crest, it also symbolizes the thirteen colonies by a golden knot of thirteen divergent wavy, floating, foliated ends upon a blue shield; and although this in itself is a very beautiful type of the United Colonies, it never would have been selected for the purpose by anybody after the invention of the thirteen stars on blue, equivalent to thirteen stars in the heavens; because the latter, as a far higher and more significant symbol, would instantly have swayed every heart in its favor.” 
 I am indebted to my kind and indefatigable correspondent, John A. McAllister, Esq., of Philadelphia, in a letter dated Oct. 26, 1871, for my first knowledge of this standard, which has altogether escaped the notice of previous historians of our flag.
 Sparks’s Life of Washington, p. 143, also Bancroft’s History United States. “On the 23d of June, the day after congress had heard the first rumors of the battle at Charlestown, Washington was escorted out of Philadelphia by the Massachusetts delegates and many others with music, officers of militia and a cavalcade of light horse in uniform. On Sunday, the 25th, all New York was in motion. Washington, accompanied by Lee and Schuyler under escort of the Philadelphia Light Horse, was known to have reached Newark. On the news that he was to cross the Hudson, bells were rung, the militia paraded in their gayest trim, and at 4 o’clock in the afternoon the commander-in-chief, dressed in a uniform of blue, was received at Lispenard’s by the mass of inhabitants. Drawn in an open carriage by a pair of white horses, he was escorted into the city by nine companies of infantry, while multitudes of all ages bent their eyes on him from house tops, the windows and the streets.
That night the royal governor, Tryon, landed without any such popular parade.” Bancroft’s History of the United States.
Nov. 21, 1775, Lady Washington was escorted from Schuylkill ferry into the city by the light horse, &c.
Nov. 27, 1775, Lady Washington attended by a troop of horse, two companies of light infantry, &c., left Philadelphia on her journey to the camp at Cambridge.
Passages from the Diary of Christopher Marshall, vol. I, 1774-77, edited by Wm. Duanc, pub. Phila., 1839.
 Bylaius, Muster Roll and Papers of the First Troop of the Philadelphia City Cavalry, Philadelphia, Jas. B. Smith and Co. 1856.
 Letters of C. J. Lukens to G. H. P., dated Nov. 6, 1871, March 21, 1872, etc. Mr. Lukens says the first troop have always prized their standard very highly, but never suspected its value in the history of the stars and stripes until informed by him.
 Mr. C. C. Haven read a paper before the New Jersey Hist. Soc., January, 1872, in which he stated that Capt. Barry was presented with a flag in 1779, which had twelve stars and stripes only on an azure field. The record of the presentation of this flag, he had seen.
 For Light Horse, though a former member of the troop suggests these letters are the monogram of Levi Hollingsworth who was quarter master of the troop at the battle of Trenton.
 Evidently referring to fame and liberty represented by the supporters. G. H. P.
 Many persons entertain the belief that the liberty cap was first used in modern times as an emblem of freedom by the French during the Revolution of 1790. That this was not the case is proved by its being one of the devices on the flag of the Philadelphia Light Horse, and also by the following resolve of the committee of safety of Philadelphia, of about the same date, viz.:
Philadelphia, August 1st, 1775. At a meeting of the Committee of Safety, held this day, Resolved, That Owen Biddle provide a seal for the use of the board, about the size of a dollar, with a cap of liberty with this motto. “This is my right and I will defend it”
The liberty cap is of Phrygian origin, and belongs to classical times. It was anciently given to freedmen as a token of manumission from bondage. The Saxons of England used it as their ordinary head dress, but without the meaning we attach to it. It was on American coins in 1783.
 Some twenty years ago, the Germantoiun Telegraph published a communication which stated that the old flag belonging to the first troop of Philadelphia county cavalry, was somewhere in existence, and it was very desirable it should be recovered. The editor adds: “It was painted in 1774, at the organization of the corps, and it is believed to be the only relic now extant of the first flag adopted by the colonies; it is designed to place it in the Philadelphia Museum for preservation. Any person who will deliver it at this office, or leave information where it can be obtained will receive the thanks of every citizen anxious that this patriotic relic should be rescued from oblivion.”
A correspondent of the Philadelphia Sunday Dispatch says: “We can say without any hesitation that the newspapers of 1774, contain nothing about the presentation of this flag, nor about the formation of the troop of Light Horse.” I have myself searched files of newspapers of 1774 and ‘5, without finding any mention of the presentation.
 Report of Mr. Lukens’s lecture on the Heraldry of the American Flag, in the Sunday Dispatch.