It is almost impossible to get an accurate picture of the early history of Rome. The original settlers would have been farmers and hunters who lived in mud and straw huts, their daily life revolving around ensuring their survival, rather then recording their history. Another factor is that the skill of writing was not known to the Latin People until after 650 BC and so it is understandable that very little evidence of these early settlers remains. The best that we can do is examine the legends that were popular enough with the Latin people that the Roman historians in later years recorded them and consider any archaeological evidence that exists from that period of history.

Roman Beliefs

The Roman’s believed in two main legends about how Rome was founded
1) Romulus and Remus. This legend is about two brothers who were left to drown by the king of Alba Longa in the river Tiber but were found by and suckled by a she-wolf before being bought up by a shepherd. They eventually killed the king and returned the rightful king, who happened to be their grandfather, back to the throne. They then decided to start their own city at the location where they had been found as babies.
2) Aeneas. This legend is about a Trojan called Aeneas who escaped the sack of Troy and underwent a long journey, overcoming many obstacles and suffering many trails before eventually landing in Italy where his people finally settled down in the city that is now Rome.

These two contradictory legends existed side by side until the 6th century BC when it was realised that there was actually a 400 year gap between the supposed end of the Trojan war (1180 BC) and the founding date of Rome (753 BC) and so it was impossible for Aeneas to have founded Rome. Over time revisions were gradually made to each story but it wasn't until the 2nd century BC that Cato combined the two stories into one consistent version that is the legend that we know today.

The revisions that Cato made were that; instead of founding Rome itself Aeneas instead came to Italy and founded the city of Alba Longa which by 650 BC was the largest of the Latin settlements. The Roman historians then filled the 400 hundred years of missing history between Aeneas and Romulus with a series of Alba Longa kings. Romulus was then linked to Aeneas through his mother, Rea Silva. Other small changes were made to fit in with other local legends (Aeneas landing on Latium's coast during the reign of Latinus, the king of the Latins) or to honour the gods (Mars being the father of Romulus and Remus). The legend of Aeneas was eventually immortalised in 19BC when Virgil wrote the epic poem The Aeneid.

It was very important to the Romans to know the exact founding date of Rome as their calendar was based on years since the founding of Rome. The Roman’s consistently believed throughout their history that Rome was founded on the 21st of April, which was marked each year by the festival of Parilia. In wasn’t until the 3rd century BC that they finally set the founding year for the city and it was at this time that the founding of Rome was set at 753 BC (up until this time the founding year was set at 750 BC).

Archaeological Evidence

It is thought that between the 10th and 8th centuries BC, central Italy was populated by two main groups: The Osco-Umbri and the Latins. The ancient territory of Latium was populated by Etruscans, Volsci, Sabins, Equi, Rutuli, and Ausonians. The Latins developed an organized society which was originally based in the the Alban hills (modern Castelli - 20 to 50 miles southeast of the Capitoline hill) at a later stage they moved down towards the valleys as they provided better land for animal breeding and agriculture. 

The area around the Tiber river was attractive for settling as it had the river as a natural border on one side and the hills could provide a safe defensive position on the other side. It would allow the Latins to control the river (and eventual commercial or military traffic on it), from the natural observation point at Isola Tiberina (the island in front of modern Trastevere). Moreover, road traffic could be controlled, since Rome was at the intersection of the principal roads to the sea coming from Sabine (in the northeast) and Etruria (to the northwest). The development of the town is presumed to have started from the development of separate small villages located on top of hills, which joined together to form Rome.

Although recent studies suggest that the Quirinal hill was very important in ancient times, the first hill to be inhabited seems to have been the Palatine (where early settlements date back to 750 BC as the Roman legends suggest), which is also at the centre of ancient Rome. Recent discoveries reveal that Germalus, on the northern part of Palatinum, was the site of a village (dated to the 9th century BC) with circular or elliptic dwellings. It was protected by a clay wall (perhaps reinforced with wood), and it is likely that this is where Rome was really founded.

Historical Background

The Latins settled the area around Rome about 1000 BC, these were primitive settlements based around farms and were places to keep livestock. The rise and domination of Rome was not inevitable, but it did have many advantages from the beginning. Rome is situated only a few miles from the sea with all its possibilities of trade. It lies central to the Italian peninsula, which in turn lies central to the entire Mediterranean Sea. Italy is guarded by the Alps to the North and by the sea all around. Add to this the influence of the Greeks which were settling Italy, founding cities like Cumea, and hence bringing advanced civilization to the country and you have a place with lots of potential. From the Greeks the Romans learnt fundamental skills such as reading and writing, even their religion is almost entirely derived from Greek mythology. i.e. for Jupiter write Zeus, Mars is Ares, Venus is Aphrodite, etc...

If the Greeks settled to the south of them, then the Roman had the Etruscans to the north. Etruria was predominantly an urban society, drawing its considerable wealth from seaborne trade. Were the Etruscans rather extravagant people, they were generally seen by the more hardy Romans to be decadent and weak. While being distinctly unique in their right the Etruscans too had very much developed from the more advanced and civilized cultures of the east, owing much of their culture to the Greeks. At around 650 to 600 BC the Etruscans crossed the Tiber and occupied Latium. It is through this, so one believes, that the settlement on the Palatine Hill was brought together with the settlements on surrounding hills, either in an attempt to fend off the invaders, or, once conquered, by the Etruscan master who sought to rule their kingdom via a structure of city states. It is at this point that the first known Kings appear. Always assuming that the likes of Romulus were to be seen as myth.