Dealing with a very timid dog myself has taught me a few things. Let's take it from the dog's perspective.

I used to get (hit/chained/left alone/abandoned) at times. I am never sure if someone is going to (hit/chain/leave alone/abandon) me. Sometimes humans are nice, sometimes they are not.

I was hit by a car (boy did that hurt). Someone picked me up (boy did that hurt) and took me to someone else to fix me (boy did that hurt).

Someone took me home with them (I still hurt but it's not as bad). She seems to be nice, but other people have been nice before and still hurt me. She gives me food (it is hurting less) and pets (that's kind of nice) and water. I'm starting to get the hang of this - food, water and pets (this is kind of nice).

We went somewhere else and it's okay because the nice lady is still there. I kind of like the other dog - he's kind of nice. I'm a little nervous so I try to jump on the sofa to get away and he is still coming. I'm scared (what if he hurts me?) so I growl a little. I'm still okay because the nice lady is still here - the one that feeds and pets me.

Oh no - where did she go? I'm in a strange house with different humans - sometimes humans are nice, sometimes their not. I'm scared. I think I will crawl into the corner where no one can hurt me. She feeds me, but other humans have fed me and then hurt me. How do I know for sure? I think I better hang out here until I figure it out.

I know it can be frustrating, but the most important thing with a shy dog is patience. Calm, matter of fact and slow movements are the key. Let James come to you when he is ready, don't force him. Make sure he knows from day one that you are alpha but you are not going to (hit/chain/leave/abandon) him. If he wants to crawl in the crate, let him. Feed him there. Take him out without Bailey for a while. Be very matter of fact with him. It will take some time, but it is well worth it.