On August 4, 1995, at 1800 Alaska daylight time, a float equipped Piper PA-12 airplane, N3688M, registered to and operated by the pilot, had a power loss in cruise flight and landed hard on the water in Cordova Bay, Alaska, which is located 38 miles southwest of Ketchikan, Alaska. The personal flight, operating under 14 CFR Part 91, departed Cordova Bay on a VFR flight plan and the destination was Ward Cove, Alaska. Visual meteorological conditions prevailed. The commercial certificated pilot, the sole occupant, was not injured and the airplane received substantial damage. During a telephone conversation with the pilot on August 11, 1995, he stated that he had 4 hours of fuel on board and had flown 2 hours. While in cruise flight, the engine "stumbled" and then stopped producing power. The pilot executed a forced landing in Cordova Bay and landed hard in rough water. The landing damaged the floats and broke a lower longeron. After drifting for 30 minutes the airplane sank. The pilot stated that the airplane had been sitting for 2 weeks and during the preflight he found water in the fuel tank sumps. He also drained the gascolator but stated that the fluid he saw in the cup was not fuel but water. He stated he thought it was fuel because it was all the same color. After the airplane was recovered he found water in the gascolator and the carburetor fuel bowl.