A flag of truce is a white flag used to indicate that a party in a conflict wishes to surrender.

In Treasure Island, Long John Silver approaches the British fort waving a white flag, indicating that he wants a truce. As one can imagine, Captain Smollett doesn't trust Silver as far as he can throw him. The wily old pirate is not exactly renowned for keeping his word. As far as Smollett is concerned, Silver's just a common criminal who'll always use violence to get what he wants. No wonder he's so skeptical when he sees him and another pirate approaching the fort with their white flag.

During his meeting with Smollett, Silver makes what he believes to be a generous offer. If Smollett allows him and his crew to get their hands on the treasure without hindrance, then he'll allow Smollett and his men to sail safely away or allow them to remain on the island without any trouble from the pirates.

Unimpressed by Silver's offer, Smollett makes his own demands: If the pirates surrender, he'll take them back to England in chains. If they don't, they're in a real pickle, because they won't have the treasure map, nor will they be able to sail the ship without help. Silver is absolutely furious at Smollett's demands and threatens to destroy the fort in retaliation.