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To add on to this, you technically cannot directly repair/grow a city. However, you CAN 'encourage' its growth by visiting nearby 'settlement' locations.
Before continuing, it is important to note that Cities (NOT settlements, missions, havens, or tribes) have 3 'hidden' statistics: Population, Wealth, and Prosperity.
Of these, Population and Wealth determine Prosperity, which in turn decides how much GOLD the merchant has, how many sailors will join you, and how much is stolen if you or the AI sack the city.
Prosperity also is the decider for AI raids (pirates and other nations prefer to invade prosperous cities, natives are random I think with a preference on population centers).
Prosperity is roughly (Wealth/Population) = Prosperity Score.
This score is divided by a hidden number to get a 'rank' that ranges from 'impoverished' to 'fabulously wealthy' (this chooses the message that is shown when you visit the city).
Despite prosperity being the most important factor, the base amount of goods/wealth/recruits is still based on city size (town, city, metropolis, etc.).
This means that for the city to be worthwhile as a trade destination or recruiting target you need BOTH POPULATION AND WEALTH because without both you can't get really good prices for trade goods.
Now for how you can manipulate this:
Population
Nearby same faction settlements have a dialogue with their mayors to direct new settlers, this decision resets every few months (so in theory, you could grind a City into a mega city, though population has a soft cap somewhere around 12K as I recall). This will dispatch a trade ship based on the faction (always galleons for Spain for example) marked as carrying settlers. The ship MUST reach the city for the bonus to apply, pirates and hostile nations will ALWAYS attack this ship, and may spawn a hunter ship to attack it if there is a hostile haven/settlement nearby.
Wealth
You cannot actually influence the wealth of Cities directly, but you can 'encourage' them to become wealthier. A city will VERY SLOWLY gain wealth as ships visit, but trade ships especially will boost the wealth. Another modifier is that PAYROLL ships give a significant boost to the city wealth, but if they are robbed the wealth will actually decrease. You can sometimes get a mission from a governor (maybe mayors? don't remember) to protect a payroll ship. If you don't take the mission, the ship is ALWAYS attacked, at which point the auto-resolve battle will decide if the ship makes it.
Faction
This is a side topic (and also likely partly wrong because it has been a while since I checked), but the ships used by each faction are decided based on the START ERA you choose when making a new game. This means that early eras heavily favor Spain because galleons are tanky compared to the sloops and barques that other nations use at the beginning. Later on, England will favor frigate and other warship variants, while France gets hyper-fast packet carriers (the dutch kinda regress getting a Jack-of-trades ship until the last era as I recall)
Ship designs generally do NOT evolve if you play a game that spans many decades.