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First of all, you need 5 citizens to build a settlement. After building a settlement you must populate all 5 of your citizens inside your settlement. Left click on the populate button (if I remember it is beside the explore button) and right click on the settlement. After all 5 citizens are in the settlement it will immediately become a town center. You can also covert it into a capitol if you populate 10 citizens or more in the town center.

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Q: How do you make a town center in Empire Earth?
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