At 06.43 hours on 13 Mar, 1942, the neutral and unescorted Tolten (Master Aquiles Ramirez) was hit near the bridge by one torpedo from U-404 and sank within 6 minutes 32 miles off Barnegat, New Jersey. The Germans reported that the ship was zigzagging in a darkened condition and was identified as Chilean ship only after the attack, in fact the master had been ordered to proceed without lights by a patrol vessel only a few hours prior to the attack. The only survivor, electrician Julio Faust, was blown overboard, managed to swim to a loose raft and passed out. He was first spotted by an aircraft in 39°50N/73°40W, later by the US Navy blimp L-2 from Lakehurst and finally picked up after 12 hours by USS Larch (AN 21) and taken to the marine hospital at Stapleton, Staten Island.

This sinking let to a harsh diplomatic reaction by the foreign minister of Chile and demonstrations against Germany, assisted by US propaganda, but unlike the declaration of war after U-boat attacks on Brazilian ships no further steps were undertaken.