The historical sense is from Late Latin burgus, from Frankish *burg, from Proto-Germanic *burgz ("borough, fortification"). borough, Brough, burgh, burh, and bury. Also compare burgess.
The modern sense may have been formed in part by analogy with the many North American city names that are suffixed with -burg (a number of which in the Eastern United States once used -burgh instead. See burgh.), as well as being formed in part due to the German Burg.
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