Because George Washington was seen as the preeminent Baller of early America, the movement to celebrate his birthday began in 1800 - the year after Washington passed away. A law wasn't passed to officially recognize Washington's birthday (actually February 22) until 1879, but it only gave people the day off in the District of Columbia. It was extended to the rest of the country in 1885. Washington's birthday was only the 4th federal holiday on the calendar, joining Christmas Day, New Year's Day, July 4, and Thanksgiving Day.
In the late 1960s the Uniform Monday Holiday Act sought to put as many federal holidays as possible on a Monday. Labor unions were all for it as they realized it would create more three-day weekends, and stimulate travel and consumer activities. A Richard Nixon executive order put Presidents' Day (lumping in Lincoln's February 12 birthday with Washington's birthday) on the third Monday of the month. Contrarians and other sticks in the mud insist on calling today Washington's Birthday and not Presidents' Day, but whatever.
Notice that Memorial Day and Columbus Day - a topic for another time - also fall on a Monday? Veterans Day was also slated to get a regular Monday appearance (it was celebrated on October 25, 1971), but widespread criticism returned it to every November 11 in 1980.
