The quote is a bit better in context.

In Foundation, the Foundation is a planet of academics with a wealth of knowledge seeking to create an Encyclopedia Galactica which houses all the wealth of human knowledge. Regrettably, it is situated between 4 monarchies that have broken away from the galactic empire and each pose a threat to the continued existence of the Foundation.

One of the first stories involves Salvor Hardin, the mayor of the Foundation, being approached by the more powerful of the four kingdoms with a threat that they will conquer the Foundation if it isn't surrendered. Many want to go to violence, but he opposes it. Spoiler time: Instead, he uses diplomacy to get the other 3 kingdoms on board with attacking the one if the one were to try and conquer Foundation. In exchange, the Foundation starts to trade their technology to the surrounding kingdoms. These kingdoms have never seen tech like what the Foundation has, and it starts to seem like magic. When Foundation starts to send engineers to manage the tech on the worlds of these kingdoms, they begin to be viewed like priests and the Foundation is the Vatican. In that way, they forced the four kingdoms into subservience through a diplomatic/religious victory.