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SEMAPHORE HISTORY
Flag semaphore is a system for conveying information at a distance by means of visual signals with hand-held flags, rods, disks, paddles, or occasionally bare or gloved hands. Information is encoded by the position of the flags; it is read when the flag is in a fixed position. Semaphores were adopted and widely used (with hand-held flags replacing the mechanical arms of shutter semaphores) in the maritime world in the early 1800s. Semaphore signals were used, for example, at the Battle of Trafalgar. This was the period in which the modern naval semaphore system was invented. This system uses hand-held flags. It is still used during underway replenishment at sea and is acceptable for emergency communication in daylight or, using lighted wands instead of flags, at night.
The newer flag semaphore system uses two short poles with square flags, which a signalman holds in different positions to signal letters of the alphabet and numbers. The signalman holds one pole in each hand, and extends each arm in one of eight possible directions. Except for in the rest position, the flags cannot overlap. (Text Quoted: See Source)

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