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You must have at least 1000000 gold. You must not already have a title such as "Sir" or "Don". (Normally you'll only get a title if you have a Letter of Marque and have reached at least rank 7, which is "Knight" or equivalent.)
Talk to any governor of a nation which is not hostile to you and not Pirate. Say "I'd like to talk to you about a small piece of business". Along with any offers of ship-hunting or Smuggling quests, the governor should say "Or perhaps you have some other business in mind?" If so, your answers will include "I was wondering about the financial state of this colony. And if, perhaps, it could benefit from a donation?"
If you already have rank at least 5 with this nation, the governor will point out that you will soon get your title by promotion and ask if you really want to buy the title. There's no point in donating 1000000 if you're about to be knighted anyway for plundering enemy ships and ports!
The governor does not want to be seen to blatantly accept a bribe. You must at least do something to merit the title. The governor, hereafter referred to as Governor 1, wants to do a trade deal with the governor of a friendly town, hereafter referred to as Governor 2. You are to take the trade proposal and return with the reply.
Governor 2 looks at the letter, is interested, but wants time to consider. You'll get your reply in 2 days. But don't be late because Governor 2 has received another offer! If you waste too much time, Governor 2 will take the rival offer, and all you can do then is return to Governor 1 and admit your failure. But if you return promptly, Governor 2 gives you a counter-proposal to take back.
Governor 1 tells you that Governor 2 wants a payment of 1000000 gold to sweeten the deal. This gives Governor 1 an opportunity to accept your offer more cleanly - you'll pay Governor 2, which saves Governor 1 a lot of money and doesn't appear on his account books. Governor 1 gives you a letter accepting the deal.
If you have high enough Commerce, and preferably Leadership too, you can haggle with Governor 2 to reduce the payment, then keep the difference. In any case, make sure you have enough money when you arrive because if you can't pay, someone else can - remember, another town is trying to get the same deal. Whether or not you negotiate a reduction, if you pay up, Governor 2 asks you to wait until next day, when the contract will be ready.
Next day - QB update. Return to the town hall to collect the contract.
As you return to where you moored your ship, whether that's the port or a beach, you are challenged and attacked. You can accept a duel or, if you have officers or crew with you, you can refuse to give up your advantage in numbers. Either way, when the attacker is dead, a squad of soldiers arrives to arrest you for murder. You can surrender and go with them, or you can fight - in which case you had better be good at it because the rest of the town guards will join in. If you survive that, you have the choice - escape by going to sea right away, or go to the town hall.
If you run away to sea, you'll fail the quest. Governor 2 has sent word to Governor 1 that you're wanted for murder. You won't be arrested again but the contract is worthless and Governor 2's nation has turned hostile because you're a wanted criminal.
Whether you surrendered to the soldiers or killed them and went to the town hall anyway, you now face the representative from the rival town, who accuses you of murder. You plead self defence. The governor considers various factors before passing judgement:
. Mooring at the port is good, mooring at a beach is bad.
. Surrendering to the soldiers is good, fighting them is bad.
. Fighting a duel without help from your crew is good, letting them join in is bad, though only if you're moored in port so there were witnesses. And you don't score points either way if you didn't have any crew with you.
Mooring in port plus surrendering to the soldiers pretty well guarantees your innocence. Mooring at a beach plus fighting the soldiers pretty well guarantees your guilt. Any other combination means the governor takes more things into account:
. Reputation of at least Dashing counts in your favour. Reputation of Bloody Terror or worse counts against you.
. Being in the sole service of Governor 2's nation counts in your favour. Having a letter of marque from Governor 2's nation also counts for you.
. Being in the service of an enemy nation counts against you. Being a pirate counts even more against you.
The governor gives the verdict. If you're found innocent, you are free to go. Return to Governor 1 to claim your reward. If you're found guilty, you're put in prison.
You will only see this if you were found guilty of murder. Governor 2 has a use for a murderer. A personal enemy has taken refuge in Smugglers' Lair. You are to go and kill him. QB update. (The enemy has a random name and appearance, so this walkthrough won't tell you who to look for - but your questbook will.)
Go to Smugglers' Lair on Camahogne/Concepcion/La Grenade/Grenada (the island has different names in different periods). Find the target. If you simply kill him, the guards will react, so try to find a sneakier way.
Talk to the target. One of your lines is "Jean has a long moustache". It's nonsense and the target knows it, so you tell him that someone in the tavern paid you to say it. Then follow the target into the tavern. There aren't many guards in there!
When the target is dead, QB update. Return to Governor 2. You get the contract back. Return to Governor 1.
You succeed if you weren't late collecting Governor 2's first reply, and you were either found innocent of murder or you killed Governor 2's enemy. Receive an instant letter of marque if you didn't already have one, instant promotion to rank 7, and the title that goes with it if Governor 1 is British, French, Spanish or Portuguese. (Holland, America and Sweden don't have titles like "Sir" but you can still get the instant promotion from them.)
You fail if you were too late collecting Governor 2's first reply, you didn't have enough money to pay Governor 2 when you took Governor 1's second letter, or you ran away instead of facing trial for murder. After 1 month, you can try again. But Governor 1 and Governor 2 will remember that you failed and will never offer this quest again. (They may, however, play the role of Governor 2 if you find another Governor 1 to give you the quest.)