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The region was inhabited by about 5000 Lenape Native Americans at the time of its European discovery in 1524 by Giovanni da Verrazzano, an Italian explorer in the service of the French crown, who called it "Nouvelle Angoulême" (New Angoulême). European settlement began with the founding of a Dutch fur trading settlement, later called "New Amsterdam," on the southern tip of Manhattan in 1614. Dutch colonial Director-General Peter Minuit purchased the island of Manhattan from the Lenape in 1626 (legend, now disproved, says that Manhattan was purchased for $24 worth of glass beads). In 1664, the British conquered the city and renamed it "New York" after the English Duke of York and Albany. At the end of the Second Anglo-Dutch War the Dutch gained control of Run (island) (a much more valuable asset at the time) in exchange for the British controlling New Amsterdam (New York) in North America. By 1700, the Lenape population was diminished to 200. New York City grew in importance as a trading port while under British rule. In 1754, Columbia University was founded under charter by King George II as King's College in Lower Manhattan. The city emerged as the theater for a series of major battles known as the New York Campaign during the American Revolutionary War.

The Continental Congress met in New York City and in 1789 the first President of the United States, George Washington, was inaugurated at Federal Hall on Wall Street. New York City was the capital of the United States until 1790. During the 19th century, the city was transformed by immigration, a visionary development proposal called the Commissioners' Plan of 1811 that expanded the city street grid to encompass all of Manhattan, and the 1819 opening of the Erie Canal, which connected the Atlantic port to the vast agricultural markets of the North American interior. By 1835, New York City had surpassed Philadelphia as the largest city in the United States. Local politics fell under the domination of Tammany Hall, a political machine supported by Irish immigrants. Public-minded members of the old merchant aristocracy pressed for Central Park, which became the first landscaped park in an American city in 1857. Anger at military conscription during the American Civil War (1861–1865) led to the Draft Riots of 1863, one of the worst incidents of civil unrest in American history. In 1898, the modern City of New York was formed with the consolidation of Brooklyn (until then an independent city), Manhattan and municipalities in the other boroughs. The opening of the New York City Subway in 1904 helped bind the new city together. Throughout the first half of the 20th century, the city became a world center for industry, commerce, and communication. In 1911, the Triangle Shirtwaist Factory fire, the city's worst industrial disaster, took the lives of 146 garment workers and spurred the growth of the International Ladies' Garment Workers' Union and major improvements in factory safety standards. In the 1920s, New York City was a major destination for African Americans during the Great Migration from the American South.

By 1916, New York City was home to the largest urban African diaspora in North America. The Harlem Renaissance flourished during the era of Prohibition, coincident with a larger economic boom that saw the skyline develop with the construction of competing skyscrapers. New York City became the most populous city in the world in 1925, overtaking London, which had reigned for a century. The difficult years of the Great Depression saw the election of reformer Fiorello LaGuardia as mayor and the fall of Tammany Hall after eighty years of political dominance. Returning World War II veterans and immigrants from Europe created a postwar economic boom and the development of huge housing tracts in eastern Queens. New York emerged from the war unscathed and the leading city of the world, with Wall Street leading America's ascendance as the world's dominant economic power, the United Nations headquarters (built in 1952) emphasizing New York's political influence, and the rise of abstract expressionism in the city precipitating New York's displacement of Paris as the center of the art world. Yet like many large American cities, New York suffered a decline in manufacturing and rising crime rates, race riots, and white flight in the 1960s. By the 1970s, the city had gained a reputation as a crime-ridden relic of history. In the 1980s, a resurgence in the financial industry improved the city's fiscal health. By the 1990s, racial tensions had calmed, crime rates dropped dramatically, and waves of new immigrants arrived from Asia and Latin America. Important new sectors, such as Silicon Alley, emerged in the city's economy and New York's population reached an all-time high in the 2000 census. The city was one of the sites of the September 11, 2001 attacks, when nearly 3,000 people died in the destruction of the World Trade Center. The Freedom Tower will be built on the site and is scheduled for completion in 2012.