Legend has it that Klagenfurt was founded after a couple of brave men had slain the abominable "Lindwurm", a winged dragon in the moors adjoining the lake, the staple diet of which is said to have been virgins, but which did not spurn the fat bull on a chain that the men had mounted on a strong tower. The feat is commemorated by a grandiose 9-ton Renaissance monument in the city centre.
Historically, the place was founded by the Spanheim Duke Herman as a stronghold sited across the commercial routes in the area. Its first mention dates from the late 12th century in a document in which Duke Ulric II. exempted St. Paul's Abbey from the toll charge "in foro Chlagenvurth". That settlement occupied an area that was subject to frequent flooding, so in 1246 Duke Herman's son, Duke Bernhard von Spanheim moved it to a safer position and is thus considered to be the actual founder of the market place, which in 1252 received a city charter.
In the following centuries Klagenfurt suffered fires, earthquakes, invasions of locusts and attacks from Turks, and was ravaged by the Peasants' Wars. In 1514 a fire almost completely destroyed the city, and in 1518 Emperor Maximilian I, unable to rebuild it, despite the loud protests of the burgers, ceded Klagenfurt to the Estates, the nobility of the Duchy. Never before had such a thing happened. The new owners, however, brought about an economic renaissance and the political and cultural ascendancy of Klagenfurt. A canal was dug to connect the city to the lake as a supply route for timber to rebuild the city and to feed the city's new moats; the noble families had their town houses built in the duchy's new capital, the city was enlarged along a geometrical chequer-board lay-out according to the Renaissance ideas of the Italian architect Domenico dell'Allio; a new city centre square, the Neuer Platz, was constructed; and the new fortifications that took half a century to build made Klagenfurt the strongest fortress north of