In O. Henry's day--the late 1800s and early 1900s--the only watches were pocket watches. These were expensive, and not all men had them. That is why there were so many public clocks on churches, commercial buildings, banks, and free standing clocks on sidewalks. These free-standing clocks are still to be seen in the downtown sections of some big cities, although many of them have stopped keeping accurate time. Jim was proud of his gold watch because it was beautiful, valuable, and had been handed down to him from his father, who inherited it from his grandfather.
Now, there were two possessions of the James Dillingham Youngs in which they both took a mighty pride. One was Jim's gold watch that had been his father's and his grandfather's. The other was Della's hair. Had the Queen of Sheba lived in the flat across the airshaft, Della would have let her hair hang out the window some day to dry just to depreciate Her Majesty's jewels and gifts. Had King Solomon been the janitor, with all his treasures piled up in the basement, Jim would have pulled out his watch every time he passed, just to see him pluck at his beard from envy.
Men usually carried their watches in their vest pockets. There was a risk of dropping a watch and seriously damaging its intricate mechanism consisting of a big spring and many gears of various sizes. If a man was constantly pulling his watch out of his pocket to check the time, or to wind it, or just to show it off, there was a good chance that sooner or later it would slip out of his hand. So the watches usually had chains with weights or fobs at one end so that if a man happened to drop his watch, the fob in the pocket would keep the watch from falling farther than the length of the chain. Della wanted to buy Jim an expensive watch fob because it seemed like the ideal Christmas present.
Grand as the watch was, he sometimes looked at it on the sly on account of the old leather strap that he used in place of a chain.
O. Henry specifies that Della pays $21.00 for the watch fob. This is to show that the entire amount of $20.00 she received from Madame Sofronie for her hair went into the purchase of Jim's Christmas present, plus one dollar out of the $1.87 she had managed to save during the year. Della had made a total sacrifice for her beloved husband.