What is the deal that Jim and the man on the Island come to terms with?

Climbing aboard the Hispaniola, Jim is surprised to see no one on deck. A bit later, however, he finds two watchmen-one is Israel Hands, who lies splashed with blood in a drunken stupor; the other is dead. Jim addresses Hands, who begs for a little brandy. Descending into the cellar, Jim finds that most of the ship's store of alcohol has been consumed. He returns with a drink for Hands and asks that Hands consider him the captain, since Jim has taken possession of the ship. In a symbolic gesture, Jim throws the pirates' flag, the Jolly Roger, overboard.