Settlements are the centers of commerce and government for your colonial empire. They are areas where several families build dwellings and shops in an attempt to establish a self-sustaining community. A colony must produce enough food to feed its inhabitants and, to grow, must have a reliable source of lumber out of which to fashion buildings and improvements.
As a settlement grows it can become a manufacturing or a shipping center for trade with the Old World. It can become a center for agricultural productivity and population growth or a link in a chain of commerce. It can become a flash point in the struggle for independence from the Crown. You decide what shape your empire will take, and what goals it will pursue. But whatever you decide, your settlements are the pistons that drive the colonial engine. Be careful when choosing settlement sites because the surrounding terrain will, to a large extent, determine the character of the new colony. Very soon after establishing a settlement, you’ll probably want to produce some cash crops or resources. Make sure your colony is adjacent to proper terrain for these purposes.
PLACING COLONIES
It is important to consider carefully where to place your colonies because success in the game is highly dependent upon where your settlements are. Try to put them in areas that will provide enough food to support the type of colony you have in mind. After choosing what nation to play as, the second decision faced by the player is where to put the first colony. There really is no hard and fast rule on where to build it, but there are some hard and fast guidelines on where not to put it. Considering the types of crops that can be grown in the area and look for abundant metal resources for future production of weapons and tools is only part of the analysis.
Here is a recommendation from an uncredited Colonization player:
1) DO NOT put your colonies immediately adjacent to [a native] village. If you do, several things will happen. You will immediately trigger [native] alarm which will almost certainly result in attacks unless you start trading with them very quickly and continually trade with them throughout the game. You will also be faced with a lot of your territory showing up as [native] lands. [..] Unless you open your colony display often or right-click on the village, you will not be able to accurately judge the state of alarm in that village because you will always see a brave standing there. This could easily result in a lot of surprise raids by the [native]s of that village because you didn't know how alarmed they really were.
2) DO NOT locate your first colony on any kind of terrain which will not generate at least 2 food units (i.e. desert, scrub forest, etc.) in the town common. You will need to leave the initial colonist to do ["]his thing["] for a while and you will need to make sure he doesn't starve while he's doing it.
3) DO NOT locate your colonies anywhere near the Arawaks if you can possibly avoid it. These [tribes] make raids at a moment's notice and are the most difficult tribe to deal with. You will spend an inordinate amount of time and resources keeping the[m] pacified only to have them go on the war path against you during your War of Independence. The best rule for the Arawaks is avoid them or wipe them out.
With some guidelines set out on what not to do, what about what to do? The same uncredited player offers this advice:
DO try to keep your colonies at least 2 squares away from any [native] villages. DO try to make sure that your first colony (at least) has access to decent quantities of BOTH lumber and ore. DO try to get a silver deposit into either your first or second colony or find the Incas and Aztecs as quickly as possible and settle near them. [..] DO use your soldier unit to build your first colony. The only thing the soldier unit can do at the start is wander around and alarm the natives.
Finally, this same person talks about his or her belie[f] in temporary colonies:
I'll build them to mine a silver deposit and then abandon them when the silver runs out. I'll build them to get a treasure train out of harm's way (the [native]s will attack them if you don't get rid of them pretty quick). I'll build them for a variety of reasons and abandon them just as quickly. This is one reason I do not like to [have Sieur de] La Salle in my Congress. Once that stockade goes up, you cannot abandon the colony. For this reason I am very choosy about which of my rival's colonies I attack. Once you've got the colony, you're often stuck with it.
WORKING THE COLONY
In order to make a colony productive and profitable, you must put people to work there. The more people you bring to a colony, the more productive it is likely to be. But the larger the settlement, the more annoying it is to the aboriginal population. You must balance the need for productivity and profit with the need for pacification of the aboriginals. Colonists can either work the fields and woods around the colony or work in the buildings of the town commons.
Note that artillery defending in a fortified colony receives a 75% bonus against native raids.
THE BUILDINGS
One of the most important actions your colonists undertake is the expansion of their colony through the construction of new buildings. When a colony is first laid out, several basic buildings (enough for an initial manufacturing effort) are erected. As the population grows, you can build new buildings and improve existing structures. Each building allows your colony to carry out activities and operations that would not otherwise be possible.
* Buildings in bold type appear automatically when a colony is built.
** Requires Adam Smith to start this project.
Ham: Hammers required to construct a building
Tools: Tolls required to finish a building
Pop: Population required to start a project
MILITARY MACHINES
The following strategies on how to obtain an effective military machine as quickly and cheaply as possible are provided and detailed by an uncredited Colonization player.
"BLOODTHIRSTY" PATH
This is described as the more aggressive of the two.
First, you absolutely MUST have Franklin in the Congress. It would be very nice to have Washington in there, also, but you can get by without him. Second, you must have a Scout (preferably Seasoned) within one turn's movement of a rival colony. With regard to this, I just usually make it a practice to keep a Scout somewhere near a major colony of each of the rival powers, especially after Franklin joins the Congress. I usually park him on a hill or a mountain about 2 squares away from the colony. This is close enough to keep an eye on things, and he's as well protected as he can be without dedicating a military unit to protecting him, but he's still one jump ahead of the posse if things go down the toilet. Third, you will need a couple or three Dragoon units (non-veteran). Lastly, you will need a target. A good one would be an inland colony with no stockade and a population of 3 or 4. [..]
Step one is to have your Scout delay his move until the end of the turn. Then, as their turns come up, attack the colony with the Dragoons. If Washington is in the Congress they will be promoted when they win the encounter. If Washington is not in the Congress you have to take your chances on their promotion. A good rule to follow is to use your veteran units (or at least free colonist Dragoons) to make the initial attack and then use your non-veteran (or criminal/servant) units to clean up. After you have captured the colony or achieved the promotion of your units, send your Scout in to make peace with the rival power. [..] [In summary,] attack your enemies unmercifully, plunder and pillage, make peace and break it with impunity. Just keep a Scout handy to make peace at the end of the turn.
PASSIVE PATH
This is described as the one for the less bloodthirsty in the audience.
For this you do not need any particular Founding Fathers, although Jefferson and Bolivar are handy. What you do need is a colony which is firmly established at 100% Sons of Liberty membership and which has a College or University. Clear out all indentured servants and petty criminals from the colony and replace them with free colonists. Put two soldiers into the college as teachers (3 if you have a university). Then start shipping free colonists to the colony to be trained. If the colony is at 100% SOL membership, it should take 3 turns to turn out as many soldiers as you have teachers, 6 turns if you are at less than 100%. [..] The only remaining problem is equipping your new veterans with muskets and horses. What follows here is what I like to call the old "Tool Switcheroo".
Eventually you will boycott tools and be unable to buy them in Europe or the price will climb up high enough that it's not worth the expense. There is still a way which you can buy them, though. It requires building some building which requires tools to complete and having a fair supply of coins in your treasury, but no tools in the colony. When you get the message that the project requires a certain number of tools to complete, but you don't have enough, open the colony display and click the "buy" button to complete the project. You will notice that the requisite number of tools have appeared in your warehouse. You can then equip someone outside the colony as a pioneer or put them in the cargo bay of a wagon train or ship and purchase the tools again. Add them to the pioneer or cargo and buy them again. It's expensive (about 1000 for 100 tools if you have not boycotted tools and about 2000 if you have), especially early in the game, but it's quick and it gets the job done.