What happened July 1937 AD

The flag was changed to have 26 stars. (for Michigan)

On the night of July 7, 1937, Chinese and Japanese troops exchanged fire in the vicinity of the Marco Polo (or Lugou) Bridge, a crucial access-route to Beijing. What began as confused, sporadic skirmishing soon escalated into a full-scale battle in which Beijing and its port city of Tianjin fell to Japanese forces (July–August 1937).

The Battle of Brunete, however, was a significant defeat for the Republic, which lost many of its most accomplished troops. The offensive led to an advance of 50 square kilometres (19 sq mi), and left 25,000 Republican casualties. The Battle of Brunete (6–25 July 1937), fought 24 kilometres (15 mi) west of Madrid, was a Republican attempt to alleviate the pressure exerted by the Nationalists on the capital and on the north during the Spanish Civil War. Although initially successful, the Republicans were forced to retreat from Brunete and suffered devastating casualties from the battle.

In early July, despite the earlier loss at the Battle of Bilbao, the government launched a strong counter-offensive to the west of Madrid, focusing on Brunete. The Battle of Bilbao was part of the War in the North, during the Spanish Civil War where the Nationalist Army captured the city of Bilbao and the remaining parts of the Basque Country still held by the Republic.

Japan captured the former Chinese imperial capital of Peking as a result of Marco Polo Bridge Incident.

On July 29, some 5,000 troops of the 1st and 2nd Corps of the East Hopei Army mutinied, turning against the Japanese garrison. In addition to Japanese military personnel, some 260 civilians living in Tongzhou in accordance with the Boxer Protocol of 1901, were killed in the uprising (predominantly Japanese including the police force and also some ethnic Koreans). The Chinese then set fire to and destroyed much of the city. Only around 60 Japanese civilians survived, who provided both journalists and later historians with firsthand witness accounts. As a result of the violence of the mutiny against Japanese civilians, the Tungchow mutiny, as it came to be called, strongly shook public opinion within Japan.