The title is derived from the flag of England's Outward Bound Sea School at Aberdovey, Wales: Mike Merriworth, a Merchant Navy hero of the Korean War returns to England after three years of captivity in Communist hands, his mind confused by brain-washing and indoctrination at the hands of his captors, and accepts a post as an instructor at the Outward Bound Sea School. He is placed in charge of "Nelson Watch," which consists of twelve boys from all walks of British life, including the usual juvenile delinquent, a dictatorial bully and a kid afraid of heights. He is a harsh commander and fails to appreciate some of their problems in light of what he has been through.