Yacht Ensign 16x24
History of the United States Yacht Ensign.
A special flag, looking like the national flag and ensign but with a fouled anchor in a circle of stars in the canton, was created by Act of Congress in August, 1848 as a flag to be used by licensed U.S. yachts. The 1848 act used the word 'signal' to describe the flag that a licensed yacht would use to declare herself exempt from customs duties; use of the flag was required by all licensed yachts under the 1848 act ("All such licensed yachts shall use a signal of the form, size, and colors prescribed by the Secretary of the Navy."). Because the flag that adopted under the 1848 act was based on the US national ensign, however, both licensed and unlicensed yachts started flying this flag as the ensign, and eventually the US Navy confirmed that it recognized this practice for yachts; however, the national flag is the only ensign allowable in international or foreign waters. In 1939, the Secretary of the Navy approved the ruling of the Judge Advocate General of the Navy "...that a ship of the Navy should return a dip made by a yacht flying the yacht ensign and that the yacht ensign may properly be made the object of a hand salute to be rendered on boarding or leaving a yacht."
The existence of the Yacht Ensign in United States statute (46 U.S.C. section 109) was repealed by the Vessel Documentation Act of 1980 (Public Law 96–594), which removed several legal provisions pertaining to the by-then obsolete category of "licensed yachts." Nevertheless, owing to its long usage, the yacht ensign is still widely flown by U.S. yachts and pleasure boats in US waters today, continuing a tradition that dates back to 1848. The states of Arkansas, Maryland, and Washington have each adopted flag protocols which provide that the U.S. ensign "and the U.S. Yacht Ensign, with a canton of 13 stars, are interchangeable on all types of recreational vessels while in national waters." Similarly, the United States Power Squadrons' guide to flags and flag etiquette, prepared in consultation with the Coast Guard, Coast Guard Auxiliary, New York Yacht Club, and others, provides that the flag may be flown on recreational boats of all types and sizes instead of the national ensign in domestic waters.