James makes some excellent points in his learned discourse on the classical British monetary system. I can agree with many of them. But I fail to see how they change my overall message, which is:

1. Thornton thought that contraction of the circulating media, i.e., what we today call broad money, would have real consequences. 

2. These real effects stem from persistence of downwardly sticky nominal wage rates in the face of contraction-caused falling prices.

3. Therefore, to Thornton, one job of the Bank of England is to prevent monetary contraction, price deflation, and hence falls in real activity. 

4. The Bank of England has the power to do this — to maintain the stock of monetary purchasing power and hence the flow of NNP —  by virtue of its monopoly control over the issue of its own Banknotes, notes which the public treats virtually “as good as gold,”  and which country banks hold as reserves in more-or-less fixed proportion behind their own note and deposit liabilities. In this way, the Bank of England governs the nation’s volume of circulating media through control of its Banknote base. 

5. This control is easiest when Britain is on a floating-exchange-rate fiat paper regime, as it was during the Napoleonic Wars when Thornton wrote. But central bank monetary control can also prevail under a fixed-exchange-rate gold standard. It can do so because the public accepts Bank of England notes as being “as good as gold” and thus as perfect substitutes for specie. When gold flows out, the BOE can replace the lost specie component of the base with offsetting issues of the Banknote component so as to keep the flow of purchasing power and NNP unchanged.

Despite James valiant effort, I remain unconvinced and continue to stick to my guns.