There are numerous theories regarding the origin of the name, "Madrid". Madrid was founded by Ocno Bianor (son of King Tirenio of Tuscany and Mantua) and was named "Metragirta" or "Mantua Carpetana". Others contend that the original name of the city was "Ursa" ("bear" in Latin), due to the high number of these animals that were found in the adjacent forests, which, together with the Madrone tree ("madroño" in Spanish), have been the emblem of the city from the Middle Ages. Nevertherless, it is now commonly believed that the origin of the current name of the city comes from the 2nd Century B.C., when the Roman Empire established a settlement on the banks of Manzanares river. The name of this first village was "Matrice" (a reference to the river that crossed the settlement). Following the invasions of the Sueves, Vandals and Alans during the 5th Century A.D., the Roman Empire could not defend its territories on the Iberian Peninsula, and were therefore overrun by the Visigoths. The barbarian tribes subsequently took control of "Matrice". In the 7th Century the Islamic conquest of the Iberian Peninsula saw the name changed to "Mayrit", from the Arabic term "Mayra" (referencing water as a "mother" or "source of life") and the Ibero-Roman suffix "it" that means "place". The modern "Madrid" evolved from the Mozarabic "Matrit", which is still in the Madrilenian gentilic. Read more at Wikipedia
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