(Edit: This was closed because it was marked as "opinion based" and I was asked to edit the question so that it could be answered by facts and citations. @Fumblefingers gave citations, thank you. On re-reading several times, I think yours is the correct interpretation, rather than assuming the existence of some actual physical flag. It's like as if we referred to captains & sailors dying in the line of duty as a "badge of honour", there's no physical badge.
In my opinion, expecting facts about poetic allusion is a bit unrealistic. Thank you @KillingTime, I hadn't known about the literature forum. I can ask such questions there, and keep this forum to linguistic questions. )
Does any English literature expert know what kind of pennant Walt Whitman was referring to by "a pennant universal" in the poem "Today a rude brief recitative of ships" in "Leaves of Grass" ?
Flaunt out O sea your separate flags of nations!
Flaunt out visible as ever the various ship-signals!
But do you reserve especially for yourself and for the soul of man
one flag above all the rest,
A spiritual woven signal for all nations, emblem of man elate above
Token of all brave captains and all intrepid sailors and mates,
And all that went down doing their duty,
Reminiscent of them, twined from all intrepid captains young or old,
A pennant universal, subtly waving all time, o'er all brave sailors,
All seas, all ships.