It was commonly referred to as a "ship jack". It was the canton of whatever national flag that the particular navy flew. I would assume that it's rectangular configuration made it "fly" better. It flew at the front of the ship. US ships practiced the same with a flag of blue with the appropriate number of stars in relation to it's national flag. The better experts here will weigh in. I hope. The national flag or flag of the country of origin flew on the tallest masthead. Ships could be "dressed" with numerous flags not including the signal flags. But including flags of the foreign port that they may be docked in. This would be a courtesy flag.

Keith