After the long mobilization ordered by Deligiannis in the mid-1880s, in an effort to deal with the crisis in Eastern Rumelia, the public deficit soared. The result was that state finances assumed the dimensions of a serious problem. Charilaos Trikoupis, who succeeded him in the position of prime minister, further increased taxes and proceeded to contract a series of loans in 1887, 1888 and 1889. He aimed to use the money raised from the loans to repay older debts, cover the country's fixed expenses and forge ahead with his programme of large public works. When he came into power again in 1892, the problem of the public deficit was even more acute. His repeated efforts to contract a new loan in anything resembling decent terms came to no avail and he resigned. S. Sotiropoulos took over having secured royal but not parliamentary support. It is interesting to note that the change in government also had the support of A. Syngros who, representing the interests of the French and the ex-patriates, made every possible effort to prevent Greece from securing a new loan and thus to strengthen the impression that the country was heading for bankruptcy. His objective since that time had been the imposition of international controls that would guarantee returns for the creditors.

The Sotiropoulos administration negotiated a loan with the British Banking House Hambro and Son which was named 'capitalization loan' and its terms were particularly usurious. A little later Charilaos Trikoupis returned to power once more, repudiated the 'capitalization loan' and tried to contract a new one. His efforts came to nothing. The country had little hopeof re-establishing its credit abroad. On 10th December 1893 he addressed Parliament in these words: 'Gentlemen, unfortunately we have gone bankrupt!' The government passed through the Chamber a 30% reduction on the serving of loan interests and the suspension of sinking funds. This development carried serious implications for the international economy and in particular for the political position of Greece abroad. It also created a negative climate in the interior. The feeling of disgrace that spread through the population on account of the country's financial impotency contributed in part to the formation of secret societies and the advancement of irredentist aims. Not much later, the financial slump was joined by the military defeat of 1897, which in its turn completed the country's economic denigration with the imposition of International Financial Control in 1898.