Etymology
The word "palace" comes from Old French palais (imperial residence), from Latin Palātium, the name of one of the seven hills of Rome. The original "palaces" on the Palatine Hill were the seat of the imperial power while the "capitol" on the Capitoline Hill was the religious nucleus of Rome. Long after the city grew to the seven hills the Palatine remained a desirable residential area. Emperor Caesar Augustus lived there in a purposely modest house only set apart from his neighbours by the two laurel trees planted to flank the front door as a sign of triumph granted by the Senate. His descendants, especially Nero, with his "Golden House" enlarged the house and grounds over and over until it took up the hill top. The word Palātium came to mean the residence of the emperor rather than the neighbourhood on top of the hill.
"Palace" meaning "government" can be recognized in a remark of Paul the Deacon, writing ca. AD 790 and describing events of the 660s: "When Grimuald set out for Beneventum, he entrusted his palace to Lupus" (Historia Langobardorum, V.xvii). At the same time, Charlemagne was consciously reviving the Roman expression in his "palace" at Aachen, of which only his chapel remains. In the 9th century, the "palace" indicated the housing of the government too, and the constantly-travelling Charlemagne built fourteen. In the early Middle Ages, the palas was usually that part of an imperial palace (or Kaiserpfalz), that housed the Great Hall, where affairs of state were conducted; it continued to be used as the seat of government in some German cities. In the Holy Roman Empire the powerful independent Electors came to be housed in palaces (Paläste). This has been used as evidence that power was widely distributed in the Empire; as in more centralized monarchies, only the monarch's residence would be a palace.
In modern times, the term has been applied by archaeologists and historians to large structures that housed combined ruler, court and bureaucracy in "palace culturtes". In informal usage, a "palace" can be extended to a grand residence of any kind.
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