The history of the Vermont state flag must include a reference to the United States flag, adopted on June 14, 1777, and described as follows: "The flag of the United States shall be thirteen stripes, alternate red and white, that the union be thirteen stars, white in a blue field."
After the admission of Vermont to the Union in 1791 and Kentucky in 1792, the design of the U.S. flag was changed by Congress in 1794 to include fifteen stripes and fifteen stars. This design remained the National emblem until 1818, was the flag which inspired Francis Scott Key to write "The Star Spangled Banner," and is usually known as the Fort McHenry flag.
The first distinct Vermont flag was a state militia flag created on October 31, 1803. Tennessee and Ohio had now been admitted into the Union and, apparently anticipating that the U.S. flag would continue to add stripes and stars for each addition, Vermont authorized a flag of seventeen stripes and seventeen stars "with the word 'VERMONT' in capitals above the said stripes and stars." However, in April, 1818, Congress authorized our present United States flag of 13 stripes, with a star for each state.
The second Vermont flag, then, was authorized on October 20, 1837, and contained "thirteen stripes, alternate red and white, and a union of one large star, white in a blue field, with the coat-of-arms of the State of Vermont therein." This remained our state flag until 1923, although it does not appear that this flag was ever used or displayed to any extent, nor even that many people were familiar with its existence. In fact, when the desirability of a change was in question, only a few of these state flags could be found.
It was felt that a distinctive Vermont flag should be created, one that as it hung on a pole could not be confused with the United States flag. It was also discovered that the second state flag had never been carried as the state colors in any of the wars in which Vermont participated, but that the flag borne by regiments of the State of Vermont in the Civil War, the Spanish- American War, the Mexican Border service and at the outbreak of World War I, was a flag having the state coat-of-arms on a blue field. A flag of the same design had by custom also been carried as the Governor's flag. Accordingly, No. 3 of the Acts of 1923 approved this design as the official state flag as it is today.