Does anyone know if this was ever done, and if so how common? I was under the impression that sub commanders would have to identify the nationality of the merchants before commencing an attack. Simply flying the flag of another country seems like an easy way to at least discourage getting attacked. I suppose or course this isn't going to work anywhere near port.
Even during peacetime, it was/is common for of merchants to fly a Flag of Convenience to get around various laws. Panama being a common flag. In this case it was semi-legitimate as the ships could "register" with any country.
https://en.wikipedia.org/wiki/Flag_of_convenience