My thinking on this matter is simple:
If it floats, i sink it.
And I dont hessitate to spend a torpedo on a small/coastal merchant.
The
only reason i would let one of those small ships go, is if im on the way for something big & time sensitive. For example, just a couple of days ago, i received radio report of a large convoy, so i did the trig proceedure to estimate a proper interception point & course, and got going. Along the way i stumbled across a small merchant, had he been on a place proper for quick interception i would have sink it, but it required some manouvering on my part, so i let him go as stopping to sink in would have most likely make me loose my intercept of the convoy.
The only targets that dont get a torpedo from me, are those tiny ships, like the fishing boats, patrol boats, coal boats (forgot their name). Those get the deck gun.