Paragon City began as a quiet collection of colonial villages in the 18th century, and by the time of the Civil War had become a bustling port city. Following the Civil War, it became a center for industry, science, and commerce in America. All through the first quarter of the 20th century, it had become everything that an American city could hope to be. Then came the stock market crash in 1929 and the Great Depression immediately following. This turn of events collapsed the fragile economy, relegating law and order to mere memories. Crime began to rise throughout the city, and mob bosses began to control every facet of the city through bribery, intimidation, andmurder.
Paragon City quickly became a place where you could trust no one in a position of authority. Every cop was on the take, every politician was ruled by a mob boss, and most of the city was out of work. Most citizens had given up all hope. It was at this time, when Paragon's citizens needed it the most, that Statesman came on the scene. He claimed that he had unlocked the very power of his own inner will. Whether they believed that or not, nobody could deny that he possessed something that hadn't been seen since before their time: super powers. Statesman used his new-found powers to try and take back this once great city.
Statesman went after gang bosses, corrupt politicians, and all of the other lowlifes of Paragon. In just a few short months he made a difference. The streets were started to look cleaner, and the citizens were growing a pride for their city they hadn't felt in years. Unfortunately, the success he saw only served to unite the criminal populace against him, slowly turning the tide. Suddenly, more and more extraordinary men and women came to fight by Statesman's side. He eventually created a team of heroes to aid in the fight against crime, and he called his team the Freedom Phalanx. The Freedom Phalanx fought crime through the 1930's and helped clean up Paragon. In 1936, the city council and mayoral elections swept a platform of pro-hero candidates that resulted in the passage of the Citizen Crime Fighting Act of 1937, making it legal for vigilantes to bring criminals to justice, as long as they followed the same restrictions as police officers.
In the span of 5 years, Freedom Phalanx went from being a band of would-be heroes to a legally recognized and nationally praised crime fighting organization. Other heroes joined in and super powered villains started appearing to offer new and more dangerous threats than ever before. Paragon City came to the forefront of these changes and it's heroes soon transformed it from the most dangerous city in America, to the pride of a nation. The age of the super powered hero had begun.