This is the Royal Banner of the House of Washington. It comes from a world where the early days of the United States were a lot more unstable than in our world. The future of the young nation was in jeopardy, and a strong leader was needed. To this end, congress asked George Washington to be crowned king, at least temporarily. Although reluctant at first, Washington agreed and was crowned King George I of House Washington. The American government continued to function as it always did; three branches with check and balances. The main difference was that the king now functioned as the executive branch, and had a bit more power than the position of president.
Washington was able to quell the unrest and brought an era of relative peace and prosperity to the United Kingdom of America. Though their troubles were behind them, it was a bittersweet time for the American people. Their fight to throw off an oppressive king 3000 miles away had ended with a new king being crowned in America. Throughout the streets, there were whispers of a desire to return America to a republic. For his part, Washington was a fairly humble king, and was supportive of these sentiments.
Washington died without leaving any heirs. During his last days, Washington expressed hope that this would lead to a return to republicanism. Unfortunately, congress did not share this sentiment. It was feared that, without a strong authority figure like a king, America would descend into chaos once again. Thus, congress sought out Washington's closest surviving male relative: George Washington Parke Custis. At the tender age of eighteen he was crowned King George II of House Washington.
George II lacked the charisma and experience of his more famous step-grandfather. Things were not looking good on the international front. Britain viewed the American monarchy as illegitimate and a slap in the face. This meant that Anglo-American relations never really healed like they did in our world. Relations with France were lukewarm at best. The leaders of the French Revolution wanted nothing to do with the monarchist America, but Napoleon was willing to compromise on a few occasions. Most notably, when he sold the Louisiana Territory to America.
Things really came to a head during the War of 1812. The British were much more focused on fighting America than they were in our world. New England, along with New York and New Jersey, used the war as an opportunity to declare independence. The British provided support to New England as a means of getting back at America. Republican sentiment has always been strongest in New England, and they weren't too pleased with how George II had handled the Embargo Act. By the time the war was over, the Republic of New England had gained international recognition.
The War of 1812 ended in a decisive British victory. America was forced to cede the Louisiana Territory, as well as large chunks of Georgia and South Carolina, back to the British. Thomas Jefferson, along with several supporters of republicanism, had formed their own nation in the Appalachian Mountains to protest the monarchy. Though a rump United Kingdom of America still exists, it is a shadow of its former glory. America never got the chance to become a great power.
The American Revolution is not viewed as a symbol liberty and freedom by this world. Rather, it is seen as a cautionary tale about the fragility of revolution and the dangers of corruption.
The Royal Banner of the House of Washington depicts George Washington as a new Hercules. Initially, the banner was considered incredibly scandalous for depicting Washington in such little clothes. For his part, Washington didn't actually want a royal banner, but nevertheless he appreciated the design.