Your first city is free; after that, you need to follow these steps:
Upgrade Moonglow Tower and Trinsic Temple to level 10. You will also require 2 Markets. You will need 250 carts or 25 trade ships; one market at level 10 only provides 200 carts, hence the reason for the requirement of two.
Research Title Advancement to Earl.
1,000 resource = 1 purified resource.
Purify 50,000 of Wood, Stone, Iron and Food for 50 of each purified type (Darkwood, Runestone, Veritium and Trueseed). You also need 50,000 Gold.
50,000 Iron & 100,000 Gold required.
Please note it will take quite a few hours for the baron to be recruited.
Either send Baron to settle a new city, or create order in a lawless city (no difference in cost of resources).
100,000 Wood & Stone, 25,000 Iron & Food and 250 carts or 25 trade ships required. Lawless cities may be some distance from your first city, so you must allow for the travel time.
Total amount of resources required from step 2 onwards equal 150,000 Wood & Stone, 125,000 Iron, 75,000 Food and 150,000 Gold.