Ken,
Flannel - Originally made from carded wool or worsted wool has been around since the 16th century. The loosely spun wool was brushed to create fine fibers, typically flannel is either single or doubled napped, perfect for use to make a lightweight flag.
The Staunton area of Virginia was made up Scott, Irish & German immigrants, sheep farming was common as was the spinning of wool for clothing, it is posable the depot received local wool flannel but most likely it was imported from Wales, London or France.
Happy Trails!
Tom Martin
www.Piedmontflag.com
www.Confederate-flags.org