S.S._Islander of Canadian Pacific Navigation Co., ca. 1897. Library and Archives Canada, public domain.
SS Islander, rumored to be carrying up to $6 million in gold, struck an iceberg August 15 in Stephens Passage and sunk behind Douglas Island. Forty lives were lost and numerous salvage attempts over the years were carried out (with varying success, although a 2012 salvage effort reportedly recovered around 1,200 troy ounces worth an average price of $1,669/troy ounce or over $2 million then https://www.coinworld.com/news/precious-metals/recovered-ss-islander-treasure-up-for-4-milion-dollars.html.)
Another spectacular but non-tragic accident befell the regular ferry Lone Fishermen November 3 when it approached the Douglas dock and was shifted into reverse speed. The linkage failed and the boat ploughed full-on into the wharf, smashing its pilot house and breaking off a steam valve. The whole vessel was engulfed in a cloud of steam and several passengers jumped off into the water, but were quickly rescued. The boat drifted out into the channel but was taken under tow by a nearby cannery tender and towed to Juneau. Temporary repairs were quickly made and the boat only missed one trip.
Treadwell was incorporated as a first-class city March 16. (It was later dis-incorporated [municipal government dissolved] in 1912.) Treadwell finally got its post office established the day before Christmas and two other post offices were established at mining camps north of Juneau: Comet, aka Seward City or Nowell City near Point Sherman on Lynn Canal, and Jualin, formerly known as Berners in Berners Bay.
A cannery and the first cold storage plant in the area were built at Taku Harbor and began operating that season.