The top one is a maxim that means something like "With Japanese spirit, an arrow can pierce an iron target". It is meant to give encouragement to the person to whom the flag is presented.
くろがねの的いし人もあるものを つらぬきとほせ大和だましい
but it uses some "hentaigana" in place of regular hiragana, so it is slightly different to the text above (which is in normal Japanese). The one on the flag is like
くろがね能ま登奉いしひ登もあるものをつらぬき登奉せやま登多ましい にし (← these last two are "Nishi", which presumably is the name of the person who wrote it).