The Original Jolly Roger, and the First Skull and Crossbones
Although the practice of piracy has been around for millennia, the use of the skull and crossbones as a flag is a relatively recent development. One of the theories to explain its adoptions hearkens back to the year 1314, when Jacques de Molay—former Grand Master of the by then disbanded Knights Templar—was executed by the French authorities. His order had been disbanded, and its members arrested, seven years previously. Since then, the disgraced knight had been subjected to relentless torture, some say because he might have known the location of the fabled Templar treasure or other secrets of great power. When he was finally burned at the stake, legend has it that individuals loyal to his cause returned to the site in the dark of knight to gather his remains. All they could find was the man's skull and two femur bones—the very same ones that are depicted on the Jolly Roger.
The flag itself, some say, takes its name from an ex-Templar by the name of Roger de Flor. He began his career as a ship's boy aboard a Mediterranean galley owned by the Templars, eventually joining the order and rising to the rank of captain. After being accused of thievery and thrown out of the order, however, he went to Genoa, borrowed money with which to purchase his own galley, and turned pirate. His mercenary band went on to serve various employers, both in battles against the Ottomans as well as in intrigues between various European factions. Eventually he was assassinated by the Emperor of Constantinople in 1305. His organization, the Catalan Company, continued to be active, and it is believed that they flew the flag to honor both him and the former Templar Commander, de Molay.
The flag itself looks much like many that have come after it, except that it has faded a bit with the passing centuries. In game terms, once per month, when it is raised in battle, all allies who are present gain the benefits of a bard's inspire courage ability (that is, a +1 bonus to saving throws against charm and fear effects, and a +1 bonus to attack and damage rolls). This is an enhancement bonus, however, and so it can stack with other effects that create a morale bonus.
It is also believed that there is still a wooden box, lined with velvet, banded in iron and sealed with a stout padlock, that contains the actual bones of Jacques de Molay—the ones gathered from the ashes after he was executed. If this box is brought aboard a ship along with the aforementioned flag, the bonus granted by them together increases to +2.