History of Sydney
With the inauguration of the Commonwealth of Australia on 1 January 1901, Sydney ceased to be a colonial capital and became the capital of the Australian state of New South Wales. With industrialisation, Sydney expanded rapidly, and by the early 20th century it had a population well in excess of one million.
History of Canberra
The district's transformation from a New South Wales rural area to a built-up national capital began during political debates over Federation in the late 19th century. Due to a temporary Gold Rush at the time, Melbourne was Australia's largest city and a potential place for the capital. However Sydney was Australia's oldest city, and so also had a justifiable claim to host the new nation's Federal polity. Western Australia, South Australia and Victoria, Melbourne's state of location —supported Melbourne. However, New South Wales (the largest colony) and its neighbouring northern state, Queensland, favoured Sydney. Perhaps one or another of the two colonial capitals might have eventually been acceptable to the smaller states, but the Sydney–Melbourne rivalry was such that neither city would ever agree to the other one becoming the capital.