Why did fixed exchange rates in the international economy work better in the period before 1914 than afterwards? A fixed exchange rate pegs one country's currency to another country’s currency, a prime example of such an existing exchange rate system is the classical gold standard which was the pillar of the world economy from about 1870-1914. The gold standard brought exchange rate stability which was the result of countries tying their currencies domestically to gold. The effectiveness of the Gold standard varied greatly from the transition period; pre-war to interwar due to several aspects. In this paper, I attempt to explain why the fixed exchange rate in the international economy worked better in the period before 1914 than afterwards. The specific goal is to identify why individual underlying conditions and factors affected the outcome so much in a way in which it turned the success of the system all around. The pre-war standard was a period of real out, price level and exchange rate stability to the world. According to Eichengreen, the success of the system was due to the multipolar nature; essentially it was primarily down to two main components - Credibility and cooperation, in which both prospects were made feasible due to the favourable environment during the pre-war period 1870-1914. The credible commitment of the core countries – Britain, Germany and France – led market agents to believe that the monetary authorities would take whatever actions were required to preserve gold convertibility (Mark Harrison et al., 2013). What rendered the commitment to the gold standard credible then, what that the commitment was international, not simply national (The Gold Standard, 2002). The credible commitment was augmented by international cooperation. Periodically, the Bank of England set its bank rate essentially acting as the leader, and other European central banks follow suit. The credible commitment was highlighted in stretches of trouble, this is seen in the Baring crisis of 1890 and 1907; because of the Bank of England’s limited gold reserves, the Banques de France and other central banks offered there assistance by providing loans. Cooperation was possible because of the absence of serious differences between the core countries, because they shared a common conceptual framework and strong domestic opposition to it was absent. The peripheral countries, including the United States – because of their less sophisticated financial system their dependence on primary commodity exports, and the power of domestic interest groups – lacked a credible commitment (Bordo, 1999). However, in normal periods, fearing loss of access to London deep capital markets, even they adhered to the gold standard rule. Credibility and cooperation was essential and was further mediated due to infrequent and generally mild shocks to the domestic and world economies. Primarily there was basically international peace and domestic calm (D.Bardo, 2014). The hegemonic role of the Bank of England was key during pre-1014 as the bank signalled the need for