meter flag?

I believe originally flags were used to indicate that a taxi or horse drawn handsome cab was engaged (by a client) or vacant. A displayed flag meant vacant, no flag displayed meant engaged

Before the advent of electronic meters taxi journeys were measured by clockwork meters.
A small lever attached to the meter was used to wind up the clockwork mechanism. this lever came to have a flag like structure to indicate the meter was or was not running. Flag Up meant the meter is not running ie vacant and for hire. Flag down meant the clockwork mechanism was wound and the meter was running ie engaged and not for hire.

what is being indicated here is that cab drivers want to communicate to potential clients their cab is not for hire at this particular time

We still "hang up" when on the phone, even though it's not on a hook any more.

And we still go for a sail, maybe on a steamer.

Linguistical inertia, or something.

I have heard the expression "to flag down a cab". And that is as far as I remember that you try to get one when on the street and not call for one-