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The Library Stores Knowledge. It creates the resource "Library" that is used to store Knowledge. For every 1 "point" of the Library resource you get 1000 (Ratio of 1:1000) knowledge that you can use to research more Techs.
The library points also appear to generate state culture (1 library point = 1 state culture)
|Appearance||Building Level||Unlocked By||Build Cost||Base Efficiency||Workers||Profession|
|4||Phonetic writting||5 Saws