Technically, the "Yacht Ensign" is flown to identify a vessel as a pleasure yacht that does not have to pay a harbor''s commercial landing fee. And is to be flown by vessels documented by the USCG as such. It''s an old custom, dating back to the days when the majority of sailboats were working boats, and only a few were "For pleasure only". The distinct "Yacht Ensign", 13 red/white stripes, a fouled
anchor inside a circle of 13 stars on a blue background, would separate the pleasure boats from the working boats, and save the harbor master the trip out to collect fees. It should only be flown in the US Territorial Waters.
So if you are looking to be correct, your vessel must be documented to fly an Ensign, and 17'' is to small for that. But as most fly them ''cause they look very "Boaty", just get one that looks in proportion, and hang it from a nice teak stern pole.