I would think that the yellow handkerchief signifies syphilus. His relationship with her, has brought him to a low state as declared in one of the verses opn the DT. Flash girls and flash company were the wild life and prostitutes, as referred to by sailors of that time. See Pills of White Mercury or Locke Hospital. Yellow flags flew on ships to signify that there was disease aboard. Hence considering the time frame of the song this might be a logical conclusion.