[Platapus]

In real life, I do not believe that passive hydrophones were useless at periscope depths but I can understand that they would be more effective at a lower depth.

The surface water disturbances, being closer at Periscope Depth would drown out any distant noise easier than when deeper.

Nothing obfuscates a topic like a good analogy.. and the following is nothing like a good analogy.

If you were to stand in a room with a fan and a person talking and you were far away from the fan you could hear both the fan and the person talking.

But when you are close to the fan, the fan noise (which has not changed) drowns out the person talking (who has not changed their volume). Your ability to hear (collect sound) has not changed either, you are just hearing more of the fan than the person talking. In this example you would not say that my hearing does not work near a fan.

I think the same analogy pertains to passive hydrophone collection at periscope depth. It still works just fine, it is just that now the hydrophone is closer to a constant noise source and thereby can't pick up the lower strength signal from the ship.