1st. That in Holland they are freed by it from taking a Pilot.

2dly. As to France they are by the Jack excused from paying the Duty of 50 Sous by Tun paid by every Mercht Man coming into a French Port.

3dly. All our Merchant Men lower their Topsails below Gravesend to any ship or vessel carrying the King's Jack, be it but a Victualling Hoy[196].

About this time another form of jack had come into use in the Mediterranean. Its origin is obscure: we first meet with it in some notes of matters to be looked into jotted down by Pepys about 1687: "Quaere, the Practice of wearing Colours in Boats? And the Budgee[197] Jack now familiarly used abroad (as lately by St Loe [198]) being the Union Jack in a Canton upon a Red Flag." It will be seen from this note that it was of similar design to the red ensign instituted in 1707, and from the juxtaposition of "Colours in Boats" it may be inferred that it was a combination of the jack and red ensign for use in boats only. It was afterwards made the distinctive jack of a privateer[199].

For the next few years more serious matters than the misuse of the Union Jack occupied the attention of the authorities, but in 1694[200], when William III was safely seated on the throne, another Proclamation, similar to that of 1674, was issued forbidding merchant ships, except those having letters of marque, to wear other colours than the "Flag and Jack white with a Red Cross commonly called St George's Cross passing quite through the same and the Ensign Red with the like Cross in a Canton White at the upper corner thereof next the staff." The privateers were to wear the same ensign as other merchant ships, but were to have the red (Budgee) jack.

Another Proclamation in identical terms was issued in the first year of Queen Anne's reign[201].

Meanwhile yet another variant of the Union Jack had been created for the use of ships commissioned by the Governors of the North American Colonies. In July, 1701, the Admiralty complained to the Council of "the inconvenience by Merchant Ships wearing the King's Colours in and among the Plantations abroad, under colour of Commissions from the Governors of the said Plantations," and obtained the Council's approval to the use by such vessels of a distinctive Jack which is thus described in the Instructions to the Governors.

Whereas great inconveniences do happen by Merchant Ships and other Vessels in the Plantations wearing the Colours born by our Ships of War under pretence of Commissions granted to them by the Governors of the said Plantations, and that by trading under those Colours, not only amongst our own Subjects, but also those of other Princes and States, and Committing divers Irregularities, they do very much dishonour our Service—For prevention whereof you are to oblige the Commanders of all such Ships, to which you shall grant Commissions, to wear no other Jack than according to the Sample here described, that is to say, such as is worn by our Ships of War, with the distinction of a White Escutchion in the middle thereof and that the said mark of distinction may extend itself to one half of the depth of the Jack and one third of the Fly thereof[202].

In 1707 was brought about that complete union of England and Scotland that James had worked for a hundred years before. The first article in the Treaty of Union provided that the crosses of St George and St Andrew should be conjoined in such manner as the queen thought fit. After due consideration of various designs suggested by a Committee of the Privy Council in conjunction with the Heralds College, it was finally decided by an Order in Council of 17th April, 1707, "That the Union Flag continue as at present." Coloured drawings of the Royal Standard, Union Flag, and Red Ensign were formally communicated to the Admiralty by a further Order in Council with instructions that these designs were to be adhered to in the flags flown at sea[203].

But although no change was made in the Union flag an important alteration was made in the Ensign; the English and Scots navies being now united, the Union was introduced into its canton in place of the St George.