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Trading posts periodically send a caravan full of money to your nearest market place. The farther away that Marketplace is, the more money it drops off on arrival.
As for Dwarves, they can only be gotten if you have a level 2-3 palace and level 3 Blacksmith. They don't have a direct economic benifit like the Elves, but they let you build cheap and powerful Ballista Towers.
Also, Elves, Dwarves and Gnomes are all mutually exclusive. As long as you have one of the three races present in your kingdom, you won't be able to construct buildings for either of the others.
Kept everything around the palace except the trade posts and I turned tax collection off on the trade posts.
Here's the link directly: http://store.steampowered.com/manual/25990