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The story seems to indicate that he used that middle name, "Dillingham" on the box because it sounded official, formal, and proud, and when it had been put on there, Jim "was being paid $30 per week", a figure apparently worthy of the fancy name. The fancy name is a sort of symbol of their financial state; at first solid, well-off, and fancy. But over time, as their finances trickled off, O. Henry states that "the letters of “Dillingham” looked blurred, as though they were thinking seriously of contracting to a modest and unassuming D." The letters themselves were fading, just as their finances were. So the name is a symbol for their finances and high hopes.
The card on the mailbox associated with the flat of the couple in "The Gift of the Magi" is inscribed "James Dillingham Young." The young couple probably had the card made up right after they were married. They were filled with hope and high expectations, and Jim earned $30 per week at that time, a wage which they evidently associated with the right to proudly declare a very noble-sounding middle name. However, they have fallen on hard times, with their income cut by one third, and now they wonder if they shouldn't just put "James D. Young" on the card. In this way O. Henry, using his tongue-in-cheek narrative tone, points out the financial hardships the young couple is facing, a detail which is key to the plot of the story. The use of the middle name shows that they desire to be respectable and respected, but Henry poignantly points out that not all of their dreams have come to fruition. Nevertheless, the author goes on to state that at home, Jim is known simply as Jim. Obviously, Della loves him for who he is rather than for his income or any societal position he bears now or might bear in the future. Their use of Jim's middle name on the mailbox shows the idealistic aspirations of the two, and the way that they go about purchasing each other's Christmas gift shows that same idealism at work.
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