Yeah, the other problem is that submarines are for sinking things not for boarding actions. This is only going to work for as long as it takes to develop decent ASW techniques/hardware, which won't take that long because they get resource priority in this TL. In the meantime existing ships will be pressed into service as ad hoc ASW frigates disguised tramp steamers with deck guns hidden collapsible boxes made to look like cargo crates, and the ships that aren't fitted with naval artillery will still at least have a heavily armed security force, in case of boarding actions.
You also need the merchant ships not to have radios. So this is more of an issue of how one moves up submarine technology without moving up ASW and radio technology/deployment. There might be a small window in the 1890-1920 timeframe with a hugely carefully written POD.
BTW, Germany did capture and sail at least one merchant ship to the USA in WW1. US court ruled the submarine needed to come to port too. Also you need to keep the prize rules in effect longer. Most had stopped paying bounties by WW1 era. So what does the effects of this strange POD look like.
You need to move submarine technology back in time. Especially longer range subs. So you need some character like behind the Zeppelin spending but on submarines. Probably for some crazy reason that is not perfectly logical. You need to setup a war that does not end quickly. You need neutral nations that I can sail the ship too. So something like a rich Russian noble family funds long range merchant subs (we need big space) in the 1880's. Then have a war where it can't end quickly, such as French/Russian war. And neutral leaning towards Russia to sail the port to. Then you can get some privateers.
Or if you want ships reflagged to another nation, make it a German noble, where the Germans reflag as Russian privateer.
Now I know I skip buckets full of butteflies, this is why I say a carefully sculpted POD, maybe pushing ASB. Basically, you need to move submersible far enough back into time we get into the age where the rules even allow privateers.