Battle of Karansebes
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The Battle of Karansebes took place on the evening of 17 September 1788, between different portions of an Austrian army which was supposed to be fighting the Turks.
The army of Austria, approximately 100,000 strong, was setting up camp around the town of Karansebes (now Caransebeş, in Romania) on the evening of the 17th. The army's vanguard, a contingent of hussars, crossed the river Timiş nearby to scout for the presence of the enemy - who in this case was the Ottoman Empire. There was no sign of a Turkish presence, but the hussars did run into a group of Gypsies, who saw the opportunity to make a load of money and offered to sell the tired soldiers some schnapps. The cavalrymen gladly handed over the money and started drinking heavily.
Soon afterwards some infantry crossed the river. When they saw the partying going on (for the Gypsies also offered girls), the infantry demanded some booze of their own. The hussars refused to turn over any of the schnapps, and in their drunken mood set up makeshift fortifications around the barrel. A heated argument ensued, and somebody fired a shot.
The hussars and infantry now began a full-fledged battle, charging at one another and so on. When it became clear that they were never going to quench their thirst at this rate, some infantry began shouting "Turci! Turci!" - "Turks! Turks!" The hussars ran away in fright, thinking the Turkish attack was imminent. Most of the infantry also ran away, because very few of them could understand each other. The army was comprised of Italians from Lombardy, Slavs from the Balkans, and Austrians, plus other minorities - none of whom could understand each other. It's not clear which, but one of these ethnicities started the "Turks" ruse without telling the others, and the others promptly fled. The situation was made worse when officers shouted "Halt! Halt!" in an attempt to restore order - this was misheard as "Allah! Allah!"
As the cavalry ran through the camps, a corps commander reasoned it was a cavalry charge by the Turkish enemy and ordered artillery to start firing. Meanwhile, the whole camp awoke to the sound of battle and, rather than waiting to see what was going on, everyone fled. The paranoid, scared troops fired at every shadow, thinking the Turks were everywhere; in reality they were shooting fellow Austrian soldiers. The lunacy escalated to the point where the whole army turned tail and fled from the imaginary enemy, and Austrian Emperor Joseph II was pushed off his horse into a small creek.
Two days later, the Turkish army arrived. They discovered no less than 10,000 killed and wounded soldiers, and no doubt had a good laugh.