This section is from the book "Scientific American Reference Book. A Manual for the Office, Household and Shop", by Albert A. Hopkins, A. Russell Bond. Also available from Amazon: Scientific American Reference Book.
"Code Flag" And "Answering Pennant."
When used as the "Code Flag" it is to be hoisted under the ensign.
When used as the "Answering Pennant" it is to be hoisted at the masthead or where best seen.
To open communication by the old Code, show the ensign with the pennant under it.