Nicholas, like many past and future Russian leaders, wanted to expand his country's territory. Looking to the Far East, Nicholas saw potential in Port Arthur, a strategic warm-water port on the Pacific Ocean in southern Manchuria (northeastern China). When Russia built its Trans-Siberian Railroad through part of Manchuria, the Japanese were further provoked. By February 1904, the Japanese had run out of patience. A Japanese fleet launched a surprise attack on Russian warships at Port Arthur, sinking two of the ships and blockading the harbor. Well-prepared Japanese troops also swarmed the Russian infantry at various points on land. Outnumbered and outmaneuvered, the Russians suffered one humiliating defeat after another, both on land and sea. Nicholas, who had never thought the Japanese would start a war, was forced to surrender to Japan in September 1905. Nicholas II became the first Tsar to lose a war to an Asian nation. An estimated 80,000 Russian soldiers lost their lives in a war that had revealed the Tsar's utter ineptitude at diplomacy and military affairs. By spring of 1905, his fleet was decimated in the Battle of Tsushima. In the wake of Russia's defeat, Nicholas II entered peace negotiations with Japan that summer, but much greater concerns soon demanded his attention.
On Sunday, January 22 1905, the workers of St. Petersburg organized a peaceful demonstration to demand political and constitutional reform. 150,000 demonstrators, including whole families, led by an Orthodox priest Father Georgi Gapon marched through the city streets armed with a petition to be presented to the Tsar, Nicholas II. The strike spread and culminated with march on the Winter Palace. Gapon and his legion of demonstrators were not anti-Tsar - indeed, dressed in their Sunday best, they took banners and portraits of the Tsar, carried icons and sung hymns and songs proclaiming their support. They believed that Nicholas was a good man but at that time the Tsar was at his summer residence outside the city.