Traditionally, the village temple was the centre of activity - be it religious, social or educational. The monk was the leader in the village. His advice was sought on village affairs and he guided the people. Particularly on Poya days, people gathered in the temple to spend the day listening to Bana sermons, learning the Dhamma and in meditation. They also discussed matters concerning the village and planned activities for the welfare of the village.

Records indicate that religious observances on Poya days had been introduced from the time of King Devanampiyatissa. Special festivals were organised to mark Vesak, Poson and Esala. The golden era of Buddhism was during the Anuradhapura period and the tempo was maintained during the Polonnaruwa period. Thereafter, there was a decline and when the Portuguese came they moved the people away from Buddhist values, customs and traditions.

The trend continued during the Dutch period and steps were taken to remove education from the temple and entrust it to the missionaries.

Dutch Governor Falk abolished the Poya holiday and made Sunday the weekly holiday in November 1770. When the British took over, they introduced the Sunday Holiday Act in 1817 when Robert Brownrigg was Governor. From April 5, 1817, Sunday was declared a public holiday. The Poya holiday was officially abolished - a privilege enjoyed by the Buddhists since the introduction of Buddhism in 247 B.C. With the abolition of the Poya holiday, Buddhists did not have the freedom to observe Vesak, the most venerated day in the Buddhist calendar.

Continuous acts by the British government to suppress Buddhism led to a Buddhist revivalist movement which gathered momentum with the arrival in Ceylon of Colonel Henry Steele Olcott, the American Theosophist on May 17, 1880. A week later, Colonel Olcott and a Russian lady in his party, Helena Petrovna Blavatsky embraced Buddhism at Vijayanandaramaya, Galle. On the same day, May 25, he established the Galle Theosophical Society.

Col. Olcott then began to work closely with Ven. Migettuwatte Gunananda Thero who spearheaded the Buddhist revivalist movement at the time. A month later, on June 17, the Colombo Buddhist Theosophical Society (BTS) was formed. Colonel Olcott gave leadership to the Buddhists, uniting them and directing them on how their lost rights could be gained.

One of the key activities planned by the Buddhists was the establishment of Buddhist schools. Their reply to the Sunday schools started by the missionaries to spread religious education was the establishment of Buddhist Sunday schools. Colonel Olcott began by setting up nine schools in the Colombo region. Ananda College was started on August 17, 1895 in Pettah with C.W. Leadbeater as Principal
Encouraged by Olcott's initiative, Buddhist leaders began setting up schools in the outstations as well. Thus Dharmaraja College was established in Kandy on June 30, 1887 and Mahinda College in Galle on February 2, 1892.

The formation of a Buddhist Defence Committee in January 1884 under the patronage of Colonel Olcott, mainly with the objective of getting the Vesak Poya holiday restored gave an impetus to the Buddhist revivalist movement. The British had not shown any interest in restoring the Vesak holiday which the Buddhists lost in 1770 during the Dutch rule.

Muhandiram A.P. Dharma Gunawardena was elected President of the Defence Committee with Don Carolis Hewavitarana as Vice President. Carolis Pujitha Gunawardena and H. A. Fernando functioned as Secretary and Treasurer respectively. Colonel Olcott was co-opted as an honorary member.

On a visit to London in February 1884, Col. Olcott handed over a memorandum to the Secretary of State for the Colonies requesting the British Government to restore the Vesak holiday. Lord Derby, the Secretary of State gave an assurance that the Governor would be consulted on the matter. On March 27, 1885, Governor Sir Arthur Hamilton Gordon issued a proclamation declaring Vesak Poya a public holiday. The Buddhists thus regained a privilege they had lost for 115 years.

In a publication on the Buddhist revival in Sri Lanka, Dr K. D. G. Wimalaratne, Director of National Archives states that with the announcement of the restoration of the Vesak holiday, the Buddhist Defence Committee decided to celebrate the Vesak Poya which fell on April 28, that year on a grand scale. A steering committee comprising ten leading Buddhists of the day was appointed. Serving on the committee were Ven. Hikkaduwe Sri Sumangala Thero, Ven. Migettuwatte Gunananda Thero, Don Carolis Hewavitarana, Muhandiram A.P. Dharma Gunawardena, William de Abrew, Carolis Pujitha Gunawardena, Charles A. de Silva, N. S. Fernando, Peter de Abrew and H.William Fernando.

The committee felt the need for a Buddhist flag to be hoisted as a unifying symbol of this memorable day.

It would symbolise the unity of the Buddhists and provide the Buddhist public with a tool to display their reverence to the Buddha. The members of the committee submitted designs for the flag and the one submitted by Carolis Pujitha (C.P) Gunawardena was accepted. Many, however, thought it was designed by Colonel Olcott who himself admitted that the credit should go to "the members of the Colombo Buddhist Theosophical Society".

The design of the flag appeared in the Sinhala newspaper 'Sarasavi Sandaresa' on April 17, 1885. Colonel Olcott was away in India at the time.

Devoting a chapter to the Buddhist flag in 'Old Diary Leaves - Volume III', Colonel Olcott refers to the "Colombo colleagues who had the happy thought of devising a flag which could be adopted by all Buddhist nations as the universal symbol of their faith, thus serving the same purpose as that of the cross for all Christians". He says: "It was a splendid idea and I saw in a moment its far reaching potentialities as an agent in that scheme of Buddhistic unity which I have clung to from the beginning of my connection with Buddhism."

Pointing out that "our Colombo brothers had hit upon the quite original and unique idea of blending in the flag the six colours believed to have been exhibited in the aura of the Buddha" Colonel Olcott states that the flag would have no political meaning whatever but be strictly religious.

The colours as mentioned in the 'Diary Leaves' are sapphire-blue (Nila), golden-yellow (Pita), crimson (Lohita), white (Avadata), scarlet (Mangasta) and a hue composed of the others blended (Prabashvara).

Early records show that the flag was ceremoniously hoisted at the Deepadittarammaya, Kotahena on Vesak day 1885 (April 28) by Venerable Migettuwatte Gunananda Thero. Flags were also hoisted at the Maligakanda Pirivena, Hunupitiya and Kelaniya temples and BTS headquarters in Colombo.

Referring to the shape of the flag, Colonel Olcott says that, "It was of the inconvenient shape of a ship's long, streaming pennant, which would be quite unsuitable for carrying in processions or fixing in rooms". He suggested that it should be made of "the usual shape and size of national flags". A sample that was made was unanimously accepted.

Thus the Buddhist flag as it is known today was born. "Accepted by the chief priests as orthodox, it at once found favour, and, on the Buddha's Birthday of that year (Vesak - 1886) was hoisted on almost every temple and decent dwelling-house in the Island. From Ceylon it has since found its way throughout the Buddhist world. I was much interested to learn, some years later, from the Tibetan Ambassador to the Viceroy, whom I met in Darjeeling, that the colours were the same as those in the flag of the Dalai Lama," Colonel Olcottt writes in his 'Diary Leaves'.

To him, the Buddhist flag is one of the prettiest in the world, the stripes being placed vertically in the order mentioned earlier, and the sequence of the hues making true chromatic harmonies.