What we now know as Memorial Day began in 1868 when Maj. Gen. John A. Logan, Commander in Chief of the Grand Army of the Republic (an organization of Union veterans), designated the 30th day of May "for the purpose of strewing with flowers or otherwise decorating the graves of comrades who died in defense of their country during the late rebellion ...." General Order #11.
Originally known as Decoration Day, by the end of the 19th century May 30 was called Memorial Day and observed throughout the nation. (See Jt. Res. 6, 49th Cong., February 23, 1887, 24 Stat. 644.) After World War I, the observance was expanded to honor those who have died in all American wars. (See Pres. Proc. of May 3, 1921, 42 Stat. 2239.)
In 1950, Congress called on the President to issue an annual proclamation designating May 30, Memorial Day, as a day for a nation-wide prayer for permanent peace. (Pub. L. 81-512, 64 Stat. 158, 36 U.S.C. 116.) Since 1971, Memorial Day has been observed on the last Monday in May. (Pub. L. 90-363, 80 Stat. 515, 5 U.S.C. 6103.)
The image above is from the Library of Congress, Civil War Photographs collection. Historical information is from the Library of Congress, "Today in History" for May 30, and from the U.S. Dept. of Veterans Affairs, Memorial Day History.