A flag with a blue ground and white square in the centre, hoisted as a signal that the ship is about to sail. Peter is a corruption of the French partir (leave or notice of departure). The flag is hoisted to give notice to the town that any person having a money-claim may make it before the ship starts, and that all about to sail are to come on board.
According to Falconer, it is a corruption of the “blue repeater.”
In whist, it is a “call for trumps”; that is, laying on your partner's card a higher one than is required.
—Mrs. Gaskell: Mary Barton, chap. xiii.`When are you going to sail?' `I cannot justly say. Our ship's bound for America next voyage ... but I've got to go to the Isle of Man first ... And I may have to hoist the blue Peter any day.'
Source: Dictionary of Phrase and Fable, E. Cobham Brewer, 1894