What Is Essential for Money To Be Money?
Suppose we are tradesmen. It matters little to any of us what commodities he takes in exchange for goods (other than commodities he himself can use). But if he takes what others refuse he is stuck with something useless, and if he refuses what others take he needlessly inconveniences his customers and himself. Each must choose what he will take according to his expectations about what he can spend -- that is, about what others will take: gold and silver if he can spend gold and silver, U.S. notes if he can spend U.S. notes, Canadian pennies if he can spend Canadian pennies, wampum if he can spend wampum, goats if he can spend goats, whatever may come along if he can spend whatever may come along, nothing if he can spend nothing. -- David Lewis, Convention, p. 7Lewis is correct: the essence of money is a convention. Menger may or may not have been correct about how money came into being, but once it did so, the essence of somethings being money is, "I should accept this for my wares since I feel confident others will accept it for their wares."
Fractional reserve bank notes are not claims to "real" pieces of money: they are new pieces of money, manufactured by a fractional reserve bank, not out of thin air, but out of confidence in the bank's sound operations. Gold is merely a prop to bolster that confidence, ad there is no reason to think that even in a free market in banking that prop could not one day be kicked away.