The capital of the Roman Empire when it was founded was Rome. Rome was established as the capital of the Roman Kingdom in the 8th century BC and later became the capital of the Roman Republic in 509 BC. With the transformation of the Roman Republic into the Roman Empire, Rome continued to serve as the capital.

Historical Significance of Rome:
Rome holds immense historical significance as it was the center of power for one of the most influential and long-lasting civilizations in human history. The Roman Empire spanned over three continents, reaching its peak in the 2nd century AD, and Rome played a crucial role in shaping the empire's cultural, political, and military affairs.

Reasons for Rome as the Capital:
Several factors contributed to Rome being chosen as the capital of the Roman Empire:

1. Geographical Advantage: Rome was strategically located on the Italian Peninsula, making it an ideal central point for governing the vast empire. Its proximity to the Mediterranean Sea facilitated trade and communication with other regions.

2. Military Control: Rome's central location allowed the Roman Empire to efficiently manage its military operations in various provinces. The Roman legions could be rapidly deployed from Rome to different parts of the empire.

3. Political and Administrative Center: Rome had a strong political and administrative infrastructure, making it an ideal choice for the capital. It had well-established institutions like the Senate, which governed the empire's affairs, and administrative offices that facilitated efficient governance.

4. Cultural and Religious Significance: Rome was considered the heart of Roman culture and religion. The Romans associated themselves with the mythical founding of Rome by Romulus and Remus and revered the city's ancient history. Rome also housed numerous temples and monuments dedicated to Roman gods and goddesses.

Legacy of Rome as the Capital:
Rome's status as the capital of the Roman Empire had a profound impact on the city and its subsequent history:

1. Architectural Marvels: Rome became home to magnificent structures like the Colosseum, Roman Forum, and the Pantheon, showcasing the empire's architectural prowess.

2. Spread of Roman Culture: The Roman Empire's influence spread throughout its territories, disseminating Roman culture, language, and legal systems. This process, known as Romanization, was centered around Rome as the cultural hub.

3. Decline and Fall: Rome's eventual decline and fall as the capital of the Roman Empire marked the end of an era. The empire faced internal power struggles, invasions, and economic challenges, leading to its eventual collapse in 476 AD.

In conclusion, Rome was the capital of the Roman Empire when it was founded due to its strategic location, political significance, and cultural importance. It played a vital role in shaping the empire's history, leaving behind a rich legacy of art, architecture, and governance.