The Submarine Commander's Handbook states:
"
In clear weather, do not allow yourself to be seen on the dip of the horizon. Submerge, at the latest, when the top of the funnel of the sighted ship is visible in the dip of the horizon. Some warships, besides having lookout posts with binoculars on the mast, have range finders of great optical efficiency in the foretop. In clear weather, therefore, one should never be able to see more of the enemy than the tops of his masts. Anyone who can see more - i.e., who approaches nearer - automatically runs the danger of being sighted, himself, by the enemy. "
In other words, as soon as you see another ship, dive to PD