This chapter explores the relation between war efforts in colonial Brazil and the expansion of Portuguese fiscal and state bureaucracies in the Americas. The role of warfare in the development of the modern state has been well documented. To pay for cumbersome armies, states were forced to obtain more resources and collect more taxes, in the process becoming more intrusive and more present in the everyday life of the populations. This is a basic premise of the Military Revolution. In this chapter, we follow in the footsteps of scholars that challenged this premise, historians that detected a problem with the timetable of the major developments: the growth of armies did not immediately lead to larger state bureaucracies and more-obedient royal agents. That was the case of the war for colonial Brazil in the seventeenth century. This chapter shows that the increase in fiscal resources earmarked for military operations was not accompanied by royal intrusion. In the war for colonial Brazil, the rise of the so-called fiscal state did not include the suppression of concurrent powers. The chapter focuses instead on an institutional development (midway between the patrimonial state and the modern state) that was successful in increasing fiscal resources precisely because the imperial state withdrew itself. We argue that during the seventeenth century, large-scale operations made royal authority more dependent on local powers, not less, to the point where the Crown had to share sovereignty functions with local institutions. In Brazil, as elsewhere, war eventually played a role in the consolidation of a more recognizable modern state, but only at a later stage. This chapter shows that it was only in the beginning of the eighteenth century that the royal bureaucracy started to replace local elites and local institutions.