neutral ships knew that u-boats were raising hell in the atlantic, and they used nearly every possible means to protect themselves from attack. this included lighting up their flags and running with all lights on... this is pretty much what ships do all the time.
chances are when you see a ship travelling blacked out it is because he is trying not to draw attention to himself... because he is an enemy ship.
some neutral ships even would go so far as to write in large letters on the port and starboard sides of the ship the name of the country of registry... ie.
"P O R T U G A L"
or they would occasionally paint a large example of their flag on the side of the ship so that from a long distance any of the warring nations could quickly ID them as non-target..
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