Excellent point, I did not provide much information.
I am playing the 1939 WW2 scenario, and want to be able to create vassals from captured cities. After thinking about this, and trying to simplify the solution, I realize I was asking for the wrong thing. I know usually you can give independence to a clump of cities, but not in this game. That is where I will start my search.
Even if I created vassal states with no cities, I cannot gift cities to vassals, correct?
Can you gift cities to team-mates?
I am going to go search for solving this another way.
Suggestions are welcome. Thanks again for your response.