"The Merchant Princes" was first published in the August 1944 issue of Astounding Science-Fiction as "The Big and the Little")

Circa 155 F.E., the powerful Foundation has subjugated the neighboring Four Kingdoms and tries expanding its religious empire. However, due to rumors of the subjugation of the Four Kingdoms and, later, Askone, further expansion faces heavy resistance. Recently, three Foundation vessels have vanished near the planets of the Republic of Korell, thus the nation is suspected of either independent technological development or buying smuggled Foundation goods. Master Trader Hober Mallow is assigned to deal with Korell and also to investigate their technological developments and find the missing ships. Those who have assigned this mission to Mallow, Foreign Secretary Publis Manlio and Mayoral Secretary Jorane Sutt, believe that a Seldon Crisis is underway; they fear that domestic tensions caused by the great autonomy given to Traders and shaky foreign relations may give rise to a nuclear conflict involving the Foundation.

Sutt and Manlio, wanting to weaken the Traders and suspecting Mallow of being connected to the smugglers, plant an agent, Jaim Twer, who boasts of a lay education, aboard Mallow's ship, the Far Star.^[ii] After the Far Star lands on Korell, the crew allows a Foundation missionary aboard the ship, in violation of orders Mallow has given that require his permission before anyone boards or leaves the Far Star.

Korellian law forbids Foundation missionaries to be on the planet under penalty of death. The crew determines that the Reverend Jord Parma of Anacreon (as he calls himself) had been captured by the Korellians but escaped before being killed. Rev. Parma is injured, apparently mentally confused, and in need of hospitalization. A short time after Parma has been let aboard the ship, an angry mob appears, surrounding the Far Star, and demanding that the missionary be turned over to them as an escaped criminal. This rapid response by the Korellians in what is an extremely remote location arouses Mallow's suspicions: Where did Parma actually escape from? Why was there a mob seemingly already gathered in the middle of nowhere? Suspecting a set-up, rather than fight the mob, Mallow decides to turn the missionary over to them (and to certain death), despite Twer's frantic attempt to intervene. Soon afterwards, Mallow is invited to meet with Korell's authoritarian ruler, Commdor ("First Citizen Of The State") Asper Argo (after several days of failure at securing such a meeting), indicating that Mallow had apparently passed a test by the Korellians by showing respect for their laws. Argo appears friendly and welcomes Foundation technological gifts; however, he refuses to allow Foundation missionaries on Korell, which turns out to coincide with Mallow's own interests.

Mallow, among other things, offers the Commdor tools for heavy industry, believing that will allow him to visit a factory, where the advanced technology would be found if Korell has it. He sees no signs of it, but does manage to catch a glimpse of the ruler's guards' weapons - atomic handguns bearing the markings of the Galactic Empire, which the Foundation assumes has fallen by this time. Mallow's discoveries lead him to believe that the Empire may be attempting to expand into the Periphery again, and has been providing weapons to client states such as Korell. Leaving the Republic and his ship, he journeys alone to the planet Siwenna, which he believes may be the capital of an Imperial province. He finds Siwenna a desolate and sad place, and meets the now-impoverished former patrician Onum Barr in the latter's isolated mansion, which is slowly crumbling. Barr, a former provincial senator and a leading citizen, had served in the Imperial government on Siwenna during a fairly stable time several decades earlier, before a series of corrupt and ambitious viceroys who each harbored dreams of becoming Emperor. After the previous viceroy rebelled against the Emperor, Barr participated in a revolution that overthrew the viceroy. However, the Imperial fleet also sent to remove the viceroy wanted to conquer a rebellious province even if it was no longer in rebellion, and began a massacre that claimed the lives of all but one of Barr's children. The new viceroy also plans a rebellion, but keeps a backup plan; fleeing into the Periphery and carving out a sizable realm there. He had secured a political alliance with Korell by marrying his daughter to Asper.

Mallow manages to tour a Siwennian power plant. He observes that the technicians can only maintain the plants, but cannot repair them. He also notes the nuclear generators are much bigger than those of Terminus. Both mean that the Empire cannot replace the goods Mallow sells to the Commdor. He also realizes that religion cannot make further conquests for the Foundation, but a commercial empire can.

Mallow is tried for murder approximately one year after his return to Terminus, due to turning over the Foundation missionary to the mob. However, he is able to produce a recording revealing to the court that the "missionary" was in fact a Korellian secret policeman. Acquitted, Mallow is received with delight by the population of Terminus, which (along with the wealth obtained by trading with Korell) all but ensures him the Mayor's seat in the elections scheduled to take place in the following year. To prepare for the election, Mallow engineers the arrest of Sutt and Manlio, suspecting them (rightly) of intending to engineer a coup with the aid of the Four Kingdoms' religious elements, and eventually takes office. However, he is soon faced with tensions between the Foundation and Korell, which declares war on the Foundation, using its powerful Imperial flotilla to attack Foundation ships. But instead of counterattacking, Mallow takes no action, effectively imposing an embargo on Korell, and waiting until the lack of Foundation goods forces Korell to surrender, which it does. Due to Mallow's control over industry and trade, The Foundation starts to become a Plutocracy. When one of his allies, horrified, asks why Mallow is not building towards a future empire Mallow replies it was only his job to stop the current crisis and history would take care of the ones to come.