The planet Terminus has been settled by the Foundation, ostensibly to prepare a giant encyclopedia to be used to preserve knowledge and science as the Galaxy around it sinks into barbarism. The leaders of Terminus, the Encyclopedists, are interested in nothing else and so come into conflict with the mayor of Terminus City, Salvor Hardin. Hardin is also worried about the fact that the local regions have formally broken away from the Galactic Empire and are now independent. Terminus has no resources of its own to speak of. How, then, is it to be protected against the aggression of its neighbors? The Encyclopedists are confident of Imperial support, and the visit of an Imperial official, Lord Dorwin, seems to confirm that. Careful analysis of Lord Dorwin’s statements, however, prove that the Empire has no intention of protecting Terminus, and the nearly simultaneous revelation by a recording of Hari Seldon (the Foundation’s founder) that the encyclopedia is a sham and the whole purpose of the Foundation is to provide the technological core around which a new Galactic Empire is to be built—all this breaks the morale of the Encyclopedists and leaves them helpless to resist Hardin’s coup d'état, the occupation of Terminus by its closest neighbor, Anacreon, and Hardin’s solution to the current problem—
Which isn’t revealed in this story.
This is the original Foundation story and among my favorites.
The style here is a bit primitive—Asimov was still emerging from his "pulp" background—but the characters are interesting, and so is the situation. (Although even now the idea of a print encyclopedia seems vaguely quaint.) I particularly love the snuff-taking Lord Dorwin. The basic situation for later stories is established well, and the reader is definitely left panting for more.
Now, science was, in some sense, Asimov’s religion, and that is nowhere better illustrated than here. The Foundation is to be a haven of technology and science and as such is to be the germ of the new (and better) Empire—an interesting faith which never really left Asimov throughout his life.
The story as originally published had a brief prologue with Hari Seldon at a conference talking about why he wanted to establish the two Foundations and where they would be. Because Foundation was a little on the short side and the beginning seemed abrupt, Asimov removed the prologue from this story and replaced it with the story, “The Psychohistorians.” The original version of “Foundation” can be found in Isaac Asimov Presents the Great SF Stories 4, 1942.