Canberra capital of Australia | Why At the end of the 19th century, the various colonies of Australia gradually moved towards federalization. At that time, the largest city was Sydney, and the most economically powerful city was Melbourne. Both cities wanted to be the capital and refused to give in to each other. To reach a compromise in 1908, it was decided to find a neutral piece of land between Sydney and Melbourne to build a new capital, which became Canberra. With a central location and gra