Admiral Hall's decision not to inform the U.S. about the impending U-boat attacks was complex, to say the least. The reasons why he would share his new intelligence with President Wilson are clear--the U.S. and Britain were allies to some degree, and it might possibly bring the U.S. into the war. However, I find his reasoning against sharing this new intel to be quite persuasive. By sharing the intel, he could lose a valuable asset which could save lives, and he might not even be believed. This is where the issue of ethics comes in.
Sharing the intel on the Germans appears to be the most ethical choice. It does right by an ally, and it saves lives. Then again, the lives possibly lost by this revelation of a way of gathering information could outweigh those saved. Once they found out the British had broken the cipher, the Germans would certainly change their encryption methods, and the flow of information would be cut off. This event could possibly lead to more losses in battle, more lives sacrificed. These two possibilities create the well-known gray area of war, in which many ask, "which path will save the most lives?" There was no true way to know which way to go, no way of figuring out just exactly how many lives would be lost either way. Admiral Hall was stuck between a rock and a hard place, his own personal catch-22.
Despite his dilemma, Admiral Hall, in my opinion, still managed to make the most ethical choice. Not only did he save the lives of his people, but he also saved the lives of the endangered Americans. By choosing to keep his intel secret, but orchestrating its revelation by way of a different channel, he managed to choose the path that wasn't apparent to many others. He kept his decryption success secret, and caused the American government to learn the true content of the telegram through a completely non-incriminating source: a mistake in the enemy's actions. Had he not done this, I might say his actions were unethical, that he should have saved the lives most definitely in danger. However, by managing to protect both potential victims from harm, I believe that Admiral Hall took the most ethical path available.