From a June 12, 2006 post:
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Hi,

why were the letters N and C chosen for the call of emergency sign?

--
kind regards,

Jonas Stein
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The assignement of flag signal NC for distress was
completely arbritary. In the original organization
of "Two Flag Signals", the signals were grouped
into categories, and the categories were sorted
in alphabetical order, starting with "Abandon"
(which had the signals from AB to AK) and
ending with "Wreck" (ZU to ZY).

Near the middle of the list were the "Distress"
category of signals, which were assigned NA
to NY. By chance, NC was assigned to "In distress":
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DISTRESS

NA-Aground; want immediate assistance.
NB-Cannot save the ship; take people off.
NC-In distress; want immediate assistance (see note above).
ND-Did you see a vessel in distress?
NE-Do you think we ought to pass a vessel in this distressed condition?
NF-Dying for want of water.
NG-Fire gains rapidly; take people off.
NH-Fire or leak; want immediate assistance.
NI-Have lost all boats; can you take off crew?
NJ-I am attacked; want assistance. Help; I am attacked.
NK-I am driving; I can veer no more cable; no more anchors to let go.
NL-I am in danger (or shoal water); direct me how to steer.
NM-I am on fire.
NO-I am sinking (or on fire); send all available boats to save
passengers and crew.
NP-I am unmanageable
NQ-I have sprung a leak.
NR-I want assistance; please remain by me.
NS-In distress; want assistance.
NT-Is not vessel (bearing if necessary) in distress?
NU-Leak is gaining rapidly.
NV-Short of provisions; starving.
NW-Vessel indicated in distress; wants immediate assistance.
NX-Vessel indicated appears in distress.
NY-With immediate assistance fire can be extinguished.
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Over the years the two-letter signal assignments have
been greatly modified, however, because of its importance,
NC continued to be assigned to "distress".

I have a full list of the orignal two-letter signals:
http://earlyradiohistory.us/1916two.htm