I didn't check to see how old this thread was but I hope that regardless, this is a rumor. Three of my ancestors, all three brothers, James, John, and William served in Company D of the 37th Mississippi at least as early as April 1863. In December of 1864 all three brothers were captured on the left flank during the second day's battle of the Siege of Nashville. The Tims trio was transported to Camp Douglas like cattle to what is coined by many historians today, a regular extermination camp. And known by those that suffered there, Eighty Acres of hell.
Alabama born Private William Tims died of exposure that led to pneumonia. The Chicago winter in 1864-65 was one of the coldest on records and the POWs there had little more than their old musty and tattered infantry coats to keep warm. The barracks were elevated adding to the misery of the wind and cold.

These three patriots stood together as the finest moment in my family's history. I hope to find some information regarding the 37th's flag, for I have never seen a copy or photo of the original.
I think there should be two laws regarding Confederate colors from the period whether they were regimental flags or ceremonial.
1. Any period any design or example of Confederate or state flags existing in the north under private or public ownership should be returned to the state the flag was originally made. If it's origin cannot be established, the flag should be donated to a worthy Civil War or Confederate museum in one of the thirteen states or two territories of the old Confederacy. Giving it over to the Sons of Confederate Veterans could be a great solution for orphaned Confederate flags existing in the North, for the organization is the living link of the soldiers and sailors that carried the Confederate flags into battle and immortality.
*In Norlands, Maine near Livermore there is a Confederate battle flag on display in the historical library there. It is neither being preserved appropriately nor displayed in an honorable fashion. It hangs from a pole near a giant window. Much of it is faded and tattered already. It may be very near to being too damaged by 148 years of exposure, light, dusty, and moisture. I do not know the origin of the flag but it is a Confederate flag from the period that men followed such flags with muskets and rebel yells. The Washburns, a very prominent, wealthy, and political family of Maine during the Civil War hailed Norlands as one of their bases. Most likely, the captured flag was presented to one of the Washburns by a Maine unit. Mayors, governors, senators, legislators; both North and South politicians and puffed up patriots standing their post in luxirious town homes and hotels hundreds of miles from combat posts made frequent requests to combat officers for flags captured from the enemy. Most were saved and used as decorative trophies, much like the Norlands flag still appears today! Sadly, many others were publicly burned or destroyed otherwise.
Very soon the Norlands flag will share this fate if some of us do not attempt to press the principal that the war is over. These flags having witnessed the same sacrifices on the field and in camp as the soldiers had experienced, they are as sacred as the final resting places of those brave soldiers!
Please visit http://www.norlands.org/ and voice your concern and interest in the matter. If you click on the museum link on the front page you’ll see in the left hand side of the forth photo, the wasting away of the captured battle flag.

2. It should be illegal to sell or auction any period Confederate or state flags privately or publicly. In my opinion this is as shameful and critically harmful to the history of my ancestor's struggle for independence and defense of everything and everyone in their life that was dear. Their homes. The less we preserve the less we leave to our children. Though we may never "impound" all the Confederate battle flags turning into dust in peoples' attics or junk chests, a serious new effort needs to form to bring these precious symbols of the bloodiest war in our history into the light and preservation!
One of the causes that so many Confederate flags, even those saved by museums are not preserved or displayed correctly is because both the NAACP and KKK have joined forces for generations to mislead the public of the true history and nature of these symbols of Southern heritage. For you will never see the 20th Maine regimental colors being buried in a museum basement or sold to the lowest bidder. Lest we forget that the enemy of those that charged with the 20th Maine banner happen to be many of our own ancestors!
The true history of the War against secession needs to be taught and respected. And when the true stories that these banners were a part of become as sacred to our country as the history and flags from every other period in our history, both shall be preserved. There would be no greater loss to our history than loosing its symbols.

And for the record, I believe these two "laws" should go both ways, regarding period Union flags as well. But the salvation and preservation of most Union war flags have never been as failing an issue as the plight of flags born in the Southern Confederacy.