"The chief foundations of all states, new as well as old or composite, are good laws and good arms; as there cannot be good laws where the state is not well armed, it follows that where they are well armed they have good laws."
I am not sure what CharlieK was trying to tell us. Actually, Machiavelli is explaining how he thinks Italian city states should rule over their subjects (with arms, he means like an army) and conduct wars (with mercenaries or a citizen army.)
A few more sentences from his dissertation makes his meaning clearer-
"The chief foundations of all states, new as well as old or composite, are good laws and good arms; and as there cannot be good laws where the state is not well armed, it follows that where they are well armed they have good laws. I shall leave the laws out of the discussion and shall speak of the arms.
I say, therefore, that the arms with which a prince defends his state are either his own, or they are mercenaries, auxiliaries, or mixed. Mercenaries and auxiliaries are useless and dangerous; and if one holds his state based on these arms, he will stand neither firm nor safe; for they are disunited, ambitious and without discipline, unfaithful, valiant before friends, cowardly before enemies; they have neither the fear of God nor fidelity to men, and destruction is deferred only so long as the attack is; for in peace one is robbed by them, and in war by the enemy. The fact is, they have no other attraction or reason for keeping the field than a trifle of stipend, which is not sufficient to make them willing to die for you. They are ready enough to be your soldiers whilst you do not make war, but if war comes they take themselves off or run from the foe; which I should have little trouble to prove, for the ruin of Italy has been caused by nothing else than by resting all her hopes for many years on mercenaries, and although they formerly made some display and appeared valiant amongst themselves, yet when the foreigners came they showed what they were. Thus it was that Charles, King of France, was allowed to seize Italy with chalk in hand; 1 and he who told us that our sins were the cause of it told the truth, but they were not the sins he imagined, but those which I have related. And as they were the sins of princes, it is the princes who have also suffered the penalty."