The town received status as a merchant town in 1268 under
Eric V of Denmark but there were already fortifications protecting the fishing community early in the 12th century. As the town grew, a fortress was constructed on the coast just south of the mouth of the inlet, in the 13th century. Construction costs for the town's fortress were paid for by money from the fishing of
herring, the town's most important source of capital. Around 1430, a defensive wall was constructed enclosing the landward side of the town which was otherwise bounded by the sea to the north, and the lake to the south. The wall was built on top of a rampart, with a moat so that the town was entirely surrounded by water. Three gate towers were constructed, one on each of the major roads passing through the wall. Only the Mill Gate (
Mølleporten) now survives. It was converted into a prison when the remainder of the wall was demolished around 1685. What remains is one of the best preserved fortresses in the Nordic countries. Although most of the town burnt down in 1457 and the plague struck in 1484, the prosperity which remained as a result of the herring trade soon led to its reestablishment. The powerful
Hansa state
Lübeck attacked Stege in 1510 and 1522, but the town defended itself both times. In 1534, during the
Count's Feud (
Grevens fejde), the town could not fend off the enemy, and the fortress was destroyed. Herring fishing was also in decline, and as a result of the multiple disasters the population fell drastically. Around 1800, merchant shipping blossomed in Stege, with the deepening of the harbour, and the building of warehouses nearby. Fine merchant estates of the time can still be seen in the area. In 1883, a large sugar factory opened on the southern side of the harbour. It remained in operation until 1989. ==Stege in the 21st century==