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While much work has been completed analyzing the role of territory and its effect on conflict (for instance, Senese and Vasquez 2008; Bremer 1992; Brockman and Gleditsch 2012), little work has been done to demonstrate how territory affects military budgets. I construct models to analyze the role of border strength and border stability measures, along with other explanations, and their impact on defense budgets. I argue that a state’s ability to collect revenues for defense are heightened when borders are clearly defined and easily defended. Using the cshapes package within R, I show that states that are clearly defined by rivers, mountains, and oceans spend less money on defense budgets as a proportion of GDP because the prospects of war are low and internal social cohesion is higher, decreasing the need for large standing militaries for either repression, expansion, or defense. Situating this debate within the state develop-ment literature helps us answer important questions regarding state formation and consolidation and the move to peacefully interact with neighbors.