Memorial Day was originally known as Decoration Day because it was a time set aside to honor the nation's Civil War dead by decorating their graves. It was first widely observed on May 30, 1868, to commemorate the sacrifices of Civil War soldiers, by proclamation of General John A. Logan of the Grand Army of the Republic, an organization of former sailors and soldiers.
By the late 1800s, many communities across the country had begun to celebrate Memorial Day and, after World War I, observances also began to honor those who had died in all of America's wars. In 1971, Congress declared Memorial Day a national holiday to be celebrated the last Monday in May. (Veterans Day, a day set aside to honor all veterans, living and dead, is celebrated each year on November 11.)
Today, Memorial Day is celebrated at Arlington National Cemetery with a ceremony in which a small American flag is placed on each grave. It is customary for the president or vice-president to give a speech honoring the contributions of the dead and to lay a wreath at the Tomb of the Unknown Soldier. About 5,000 people attend the ceremony annually.
Several Southern states continue to set aside a special day for honoring the Confederate dead, which is usually called Confederate Memorial Day.
Taken from: http://www.history.com/topics/memorial-day-history
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