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I haven't read this whole thread, so I might be a bit behind, but it seems to me that Duchies were almost always (I only know of one exception, and that's the Duchy of Friedland, much later) created by the ruling monarch of the region, and were usually given to close allies or family members (occationally dowries).
In light of this I think Duchy titles should be created without limit by the monarch at a cost (if a monarch wants one province duchies, so be it), but that Monarchs can not hold duchy titles for territories within their realms (I'd argue the same for county titles, but generally the count title in game just means they hold that province). I don't know if anyone has examples of reigning monarchs who were their own dukes, I am unaware of any examples.

King John the Good of France was also duke of Burgundy at the same time; Burgundy didn't want to be absorbed into the Royal Domain, otherwise the estates of Burgundy wouldn't have allowed John to be their duke.

Furthermore a lot of Holy Roman Emperors/king of the Romans held their own territory as their powerbase.
 
The Polish kings after Vladislav Jagello were also Grand Dukes of Lithuania; after the incorporation of Mazovia into the royal demesne, they also styled themselves Dukes of Mazovia.
The Bohemian kings were also dukes of Silesia, Moravia and Lusatia.
The Valois branch of the Capets were also dukes of Valois - hence their name of their branch. Louis XI became duke of Burgundy after the death of Charles le Temeraire. Louis XII of Valois-Orleans was also, as his name implies, duke of Orleans. Francisc I was duke of Valois, Orleans, Anjou and Angouleme and, after the death of Claude de France, he became duke of Brittany as well.
In Hungary, the kings were also dukes of Rama, Dalmatia, Slavonia, while some of them styled themselves also as dukes of Cumania and Galich. The Duchy of Transylvania was also considered to be royal territory, the voyvode being only the king's representative in that land, the office not being hereditary.
 
The Polish kings after Vladislav Jagello were also Grand Dukes of Lithuania; after the incorporation of Mazovia into the royal demesne, they also styled themselves Dukes of Mazovia.
The Bohemian kings were also dukes of Silesia, Moravia and Lusatia.
The Valois branch of the Capets were also dukes of Valois - hence their name of their branch. Louis XI became duke of Burgundy after the death of Charles le Temeraire. Louis XII of Valois-Orleans was also, as his name implies, duke of Orleans. Francisc I was duke of Valois, Orleans, Anjou and Angouleme and, after the death of Claude de France, he became duke of Brittany as well.
In Hungary, the kings were also dukes of Rama, Dalmatia, Slavonia, while some of them styled themselves also as dukes of Cumania and Galich. The Duchy of Transylvania was also considered to be royal territory, the voyvode being only the king's representative in that land, the office not being hereditary.

Most of those examples though it seems they're claiming their Duchy's as distinct political entities. Poland and Lithuania didn't merge their crowns until well after this period, with the two territories being seen as completely distinct. I have no idea about the status of Mazovia, but Silesia, Moravia, and Lusatia, as far as I'm aware, were seen as distinct territories, attached to the Crown of Bohemia. The same goes for Rama, Dalmatia, and Slavonia.

The example of the Valois seems the only inarguable example of a king claiming to be duke of a territory that was part of his Duchy
 
I think that the best way to let the player build "his own kingdom" like the op said, is to make certain provinces and regions more prestigious than other places. For example you are the duke of Athens and you own more than 10 provinces, have +500 prestige and you have no liege, you can take the title of king of Athens. But you can't do the same if you are duke of Rashka for example.

What I'm triyng to say is that you could build Kingdoms based around glorious ancient cities and regions that would be recognized in the game by a system similar to the victory points system in HoI2. Those regions should include : Athens, Rome, Macedonia, Dacia, Kiev, Moscow, Tunis\Carthage, Damascus, Tuscany, Lombardia, etc. Feel free to add other regions if I missed any.
 
I don't speak my mind here much, but I did very much enjoy the novel 'dynastic' approach PI took to the Crusader Kings game and I very much look forward to adding CK2 to my nearly complete PI strategy collection.

My opinion on this subject cuts down to a basic philosophy that; 'A mans rule is measured by the reach of his sword, the loyalty he inspires and the extent of his gold.'
Along with this I might add, regarding the 'historical/ahistorical' thing; The only difference between truth and fiction, is that fiction must be made plausible. So long as all historical triggers begin with [if - condition a+b+c exist - then] so that players who wish to claim historical kingdoms may and IF the player also wishes to claim a non-historical duchy or kingdom, then I would see the ability for non-AI players to claim an elevation in title, if they meet or exceed pre/co-requisite parameters. The name of this new duchy/kingdom might be selectable from a drop down that might include capitol/ethnic/historical/family names. There might even be a title or condition (Lord, Prince, Claimant?) either temporary(depending on the following battles to maintain soverienty until accepted by peace treaties) or permanent, created where a player might attain those 'perks' that we desire in kingship, such as the next tier of title appointments, without recognition of those other perks gained by recognition from other kings and pope, etc... An aside to this might be that permanent demi-title might be accepted by AI-kings and pope, after certain other conditions are met, such as time or diplomacy/currency. I feel that, at least in a single player game, if the AI is restricted to historical titles, that this will maintain enough of a historical flavour to satisfy someone who is after all, only playing a game, and not reliving history.

From this I would claim my opinion in the ensuing discussion to be that the creation of a unique Duchy/Kingdon have several influences, but foremost among those would be his strength in arms factored with the loyalty of his subjects, vassals and neighbors.
I would also see a nostalgia variable factored in, where if another player or the AI triggers the formation of the historical duchy/kingdom, your subjects that were historicaly aligned to this, would have a weighted decision, that includes your and the historical rulers Bad Boy rating, based on their/your Happiness+Loyalty+Dynasty(strong variable based on the time length of your families rule)+your overall Traits to determine a Nostalgia factor minus Bad Boy -less- the Historical Rulers H+L+T+R minus Bad Boy and when the remainder reaches a certain level, to create a trigger likelyhood percentage% to break away from you and join with that ruler. Precreating the variables and adding them to the characters values for these factors on the fly will reduce the CPU hits between turns to a simple [If HR=Yes Then N-HR=%] formula, rather than trying to calculate every influence in a single stack, and where I might also make the consideration and argument for this feasable at the least.
Conditions and results, along with a province number requirement, might be:
1) If a count claim duke or a duke claim king, any other of his geographical neighbors or claimants of influence that might have 'historical' issue with this, be it through claim to land or hereditary right to title would be triggered to; weighing orders from their ruler/friendship/loyalty/balance of strength/kinship/and their current state of security into a decision to accept, ignore or fight the claim.
2) Heredity; If, prior to the claim, the count or duke has been a ruler of each dimense for a certain number of years and x number of generations, this along with current conditions in each province that would factor into a stability hit that affected provinces would take when the claim is made, immediately when the claim is made rather than between turns.
3) If the 'personality' factors are to be included in CK2, there might also be certain requisites from this that might limit or enhance the new claim. I haven't decided if I would use the stand alone traits, or base it on the ministers influenced traits at this time though, but I am leaning towards some factor of both that would include a variable from the ministers current loyalty.
Martial - The strength of this trait would factor into the weighted 'Go To War' decision of neighbors laying claim.
Diplomacy - The strength of this would also influence initial acceptance and then the acceptance of treaties after 'Go To War' is/if initiated by neighbors.
Intrigue - A strong intrigue could also lend a pre-conditioning where you might initiate missions to neighboring duchies/kingdoms to pre-influence (diplomacy/$$$/provinces/relinquish claims/promises/threats) acceptance of your claim before the fact and/or assist with peace settlements if they go to war.
Stewardship - This would simply be a factor that would influence your subjects, as it would be a determinant in the overall income and sustainability/stability variable of your realm.
Prestige - This, of course, would be a pre-requisite to acceptance of the claim by neighbor and subject/vassal alike.
Piety - Would influence Papal blessing of the claim, not only in the immediate, but if there were a temporary title with the eventuality of acceptance by an heir based on his piety.
Health and Fertility .. I suppose that Health would of course factor into your neighbors decisions to attack, and both could be a factor by including health and the number of your heirs/aka/plausible continuity of your dynasty, into the acceptance by your subjects.


That having been said, I would, if I may, add a few quick quotes from an author who has historically, been afforded the title of 'Authority' on the subject of medieval principalities, Niccolo Machiavelli.
If you do not have Machiavellis writings in your library, this book can be read in it's entirety online at: http://www.gutenberg.org/catalog/world/readfile?fk_files=1883724
And I would advise reading at least, The Prince, before arguing against my suggestions, so that you may do so from a viewpoint which includes some of those influences that have colored my opinions on this.

Max
____________________

THE PRINCE




CHAPTER I -- HOW MANY KINDS OF PRINCIPALITIES THERE ARE, AND BY WHAT
MEANS THEY ARE ACQUIRED

All states, all powers, that have held and hold rule over men have been
and are either republics or principalities.

Principalities are either hereditary, in which the family has been long
established; or they are new.

The new are either entirely new, as was Milan to Francesco Sforza, or
they are, as it were, members annexed to the hereditary state of the
prince who has acquired them, as was the kingdom of Naples to that of
the King of Spain.

Such dominions thus acquired are either accustomed to live under a
prince, or to live in freedom; and are acquired either by the arms of
the prince himself, or of others, or else by fortune or by ability.
---------------
But the difficulties occur in a new principality. And firstly, if it be
not entirely new, but is, as it were, a member of a state which, taken
collectively, may be called composite, the changes arise chiefly from
an inherent difficulty which there is in all new principalities; for
men change their rulers willingly, hoping to better themselves, and this
hope induces them to take up arms against him who rules: wherein they
are deceived, because they afterwards find by experience they have
gone from bad to worse. This follows also on another natural and common
necessity, which always causes a new prince to burden those who have
submitted to him with his soldiery and with infinite other hardships
which he must put upon his new acquisition.

In this way you have enemies in all those whom you have injured in
seizing that principality, and you are not able to keep those friends
who put you there because of your not being able to satisfy them in the
way they expected, and you cannot take strong measures against them,
feeling bound to them. For, although one may be very strong in armed
forces, yet in entering a province one has always need of the goodwill
of the natives.

For these reasons Louis the Twelfth, King of France, quickly occupied
Milan, and as quickly lost it; and to turn him out the first time it
only needed Lodovico's own forces; because those who had opened the
gates to him, finding themselves deceived in their hopes of future
benefit, would not endure the ill-treatment of the new prince. It is
very true that, after acquiring rebellious provinces a second time,
they are not so lightly lost afterwards, because the prince, with
little reluctance, takes the opportunity of the rebellion to punish the
delinquents, to clear out the suspects, and to strengthen himself in the
weakest places. Thus to cause France to lose Milan the first time it was
enough for the Duke Lodovico(*) to raise insurrections on the borders;
but to cause him to lose it a second time it was necessary to bring
the whole world against him, and that his armies should be defeated and
driven out of Italy; which followed from the causes above mentioned.
---------------
The wish to acquire is in truth very natural and common, and men always
do so when they can, and for this they will be praised not blamed; but
when they cannot do so, yet wish to do so by any means, then there is
folly and blame.
---------------
Nor is it enough for you to have exterminated
the family of the prince, because the lords that remain make themselves
the heads of fresh movements against you, and as you are unable either
to satisfy or exterminate them, that state is lost whenever time brings
the opportunity.
 
I haven't read this whole thread, so I might be a bit behind, but it seems to me that Duchies were almost always (I only know of one exception, and that's the Duchy of Friedland, much later) created by the ruling monarch of the region, and were usually given to close allies or family members (occationally dowries).
In light of this I think Duchy titles should be created without limit by the monarch at a cost (if a monarch wants one province duchies, so be it), but that Monarchs can not hold duchy titles for territories within their realms (I'd argue the same for county titles, but generally the count title in game just means they hold that province). I don't know if anyone has examples of reigning monarchs who were their own dukes, I am unaware of any examples.

England. King of England, Duke of Normandy, - nominally any duchy which wasn't given out to relatives/supporters - Duke of Lancaster.
 
Max 127 seems right to me. Personally I dont think that there should be any requirements to call yourself a Duke or a King, but the game should slap you down if you are a OPM calling yourself the King of Urbino and you dont have any strength. For example I think that if you are going to form a Kingdom you should first begin by breaking your covenant with your Liege Lord, once you owe naught to the leige lord and have two alliances you can proclaim yourself King of (insert new Kingdom) if it is new then great. If it is taken already then you are in direct conflict with the owner of the title. Personally I think that is how all titles should be claimed. For example start as a Count and try to extend your boundaries by exerting influence over neighbouring barons and your own. The roleplaying element should be strong. I cant wait for example to own Normandy, Picardy, Belgium, Paris and Orleans calling my King Conan and the realm Aquilonia but that is just me.
 
I think that the best way to let the player build "his own kingdom" like the op said, is to make certain provinces and regions more prestigious than other places. For example you are the duke of Athens and you own more than 10 provinces, have +500 prestige and you have no liege, you can take the title of king of Athens. But you can't do the same if you are duke of Rashka for example.

What I'm triyng to say is that you could build Kingdoms based around glorious ancient cities and regions that would be recognized in the game by a system similar to the victory points system in HoI2. Those regions should include : Athens, Rome, Macedonia, Dacia, Kiev, Moscow, Tunis\Carthage, Damascus, Tuscany, Lombardia, etc. Feel free to add other regions if I missed any.
I'm also in support of the idea. If people dont like concept then maybe it should be a game option that one can turn off.