In early 1896, the Greek premier, Theodoros Deligiannis (1895-97) was facing serious financial issues, and Crete, then under Ottoman rule, was ready to explode. The Sultan appointed the Greek-born Alexander Karatheodoris Pasha as governor of Crete in 1895. His mission failed as his liberal spirit angered the Turko-Cretans, who decided to make his further stay on the island impossible. Riots erupted and killings of Christian dignitaries took place.

Karatheodoris was succeeded by the Turco-Albanian Turkhan Pasha (1895-96), who was accepted by the Christians. He was fluent in Greek and considered a capable but hesitant administrator. However, the great European powers suggested that the former governor of Samos, George Verovits (1895-6) should take over the administration of Crete (1896-7).

Nothing changed and the situation continued from bad to worse. The Christian Greeks, who made up 80% of the inhabitants of Crete, revolted and demanded autonomy for their island.

England, France, Russia, Austria, and Italy sent ships to Crete to protect their nationals. Greece wanted to do the same but was blocked by the ambassadors of the Great Powers in Athens. However, the secret National Society established by a group of army officers in Athens in November 1894 believed in the Great Idea of gathering all Greeks into the Greek state. It raised funds to aid the struggle in Crete.

This action provoked the reaction of Sultan Abdul Hamid, while for their part the Great Powers tried to persuade him to give greater privileges to the Greeks. The Sultan accepted that the governor of Crete should always be a Christian and to be appointed with the consent of the Great Powers, but at the same time, he encouraged the Turko-Cretans to become more provocative every day.

On January 24, 1897, the Muslims massacred Christians in Chania. Deligiannis was in a difficult political position and reacted by sending military forces to Crete, knowing that this would be a cause of war between Greece and the Ottoman Empire. A fleet of warships headed to the island under Prince George of Greece with instructions to assist the Cretan insurgents and to harass Ottoman shipping.

The Greek force led by Colonel Vassos had its first success on February 7 defeating a combined Turco-Cretan and Ottoman force. The Great Powers forbade any further offensive action by Vassos and his men, but with the presence of Greek forces in Crete, the Sultan had no choice but to declare war on Greece. He did so on April 5, 1897.

At that time, the Greek-Turkish border ran along the line from Arta to close to Mt. Olympus. The Turks assembled a military force of 121,500 men and 1,300 cavalry, led by Edhem Pasha and German advisers. Greece deployed 54,000 men and 500 cavalry, led by Crown Prince Constantine.

The first week of the military operations staged between April 6-11 was spent in a battle of trenches along the Thessalian border. On April 11, Edhem Pasha and his men entered Greek territory from the Straits of Meluna and quickly met Greek forces in Tyrnavos on April 12. The Greek soldiers retreated to their new defensive line at Farsala, leaving Larissa to its fate. The inhabitants evacuated Larissa before its occupation by the Turks on April 13. On the same day, a Turkish force headed for Velestino, where it was confronted by Colonel Smolenskis and his brigade. Smolenskis was a highly regarded artillery officer who led his troops with competence.

With low morale, however, the Greeks suffered another defeat at Farsala, on April 24, this time retreating in order. Smolenskis was ordered to leave Velestino and go with his forces to Domokos, where the Greeks were preparing a new line of defense – all in vain, however, after the superior Turkish army achieved another victory on May 5, thus paving the way to Athens. In a last-ditch effort, Smolenskis, who proved to be the most reliable military man, was ordered by Constantine to keep the passage to Thermopylae open. It was not necessary, however, because the Great Powers intervened.

Russia’s Tsar Nicholas II, a close relative of the Greek King George I, persuaded the Sultan to order a ceasefire. The relevant protocol was signed in the village of Taratsa in Lamia on May 8, 1897, with the Ottomans having recaptured all of Thessaly. On the front of Epirus the armistice took place one day earlier (May 7, 1897). Things there had turned out better for the Greek Army. Colonel Manos' forces not only held on to the Arta-Peta line but also advanced into Turkish territory. The losses for the Greek side were 672 dead, 2,383 wounded and 252 prisoners and for the Turkish side 1,111 dead, 3,238 wounded, and 15 prisoners.

The main reasons for the national humiliation of 1897 were the lack of insight of the politicians and the unpreparedness of the Greek army. The Deligiannis government, to deal with the country's financial problem, had cut military spending, while partisanship reigned in the army, promoting incompetent officers to senior positions. There was also public criticism of the royal princes being promoted to positions of authority at the expense of competent officers who had been overlooked for promotion.

Deligiannis resigned under public pressure over this crushing defeat and the Treaty of Constantinople was signed on November 22, 1897 by Alexandros Zaimis, establishing peace between the Hellenic Kingdom and Ottoman Empire.

With the agreement, worked out by the Great Powers, the territorial losses for Greece were small, after regaining Thessaly, which it had lost on the battlefield. The Greek national psyche was crushed, humiliated, and degraded with this loss, and needed something to revive it. That came with the Goudi revolt in 1909 which paved the way for the entry of Eleftherios Venizelos into Greek national politics.

However, Greece was bankrupt and was forced to pay the huge amount of four million Turkish pounds as war reparations. She was forced to take out another loan and, to pay off her huge debts, her finances were placed under International Financial Control. This resulted in the transfer of sources of public revenue to its creditors and thus created the famous monopolies on cigarette paper, salt, oil, tobacco, matches, and playing cards. The International Financial Commission was represented by six members of the major European powers who had great influence over Greece’s internal and external financial and economic affairs.

Crete, however, did gain its autonomy with the departure of Ottoman troops and Prince George appointed as governor with the approval of the Great Powers in 1898. During the Balkan Wars of 1912-13, Crete would finally unite with Greece, thus ending Ottoman domination of the island.