What is the symbolism in "The Gift of the Magi" by O. Henry?

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In addition to the gifts themselves being symbolic, Jim and Della are also symbolic.  The title helps us understand the parallel between Jim and Della and the wise men from the story of Jesus's birth.  Just as the original magi brought gifts to Jesus (literally the first Christmas gifts), this young couple gives each other gifts too.  But there is a big difference between the original magi and Jim and Della: the original wise men were kings who did not have to make sacrifices in order to bring rich and precious gifts to the Christ child.  Jim and Della, however, are quite poor and must sacrifice the things most important to them so each can give a gift to the other. Ultimately, this makes their gifts that much more meaningful and valuable.  Thus, the narrator says,

Of all who give gifts, these two were the most wise.  Of all who give and receive gifts, such as they are the most wise. Everywhere they are the wise ones.  They are the magi.

The narrator suggests Jim and Della are actually wiser than the wise men because they understand love makes a gift truly worth giving.  The two recognize the sacrifice made makes their gifts so valuable, not because the gifts themselves are worth a lot of money.

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In "The Gift of the Magi" O' Henry uses symbolism in reference to the Three Magi (The 3 Wisemen).  They come bearing gifts of gold, frankincense and myrrh to Baby Jesus in Bethlehem.  The gold is a symbol of love, the frankincense and myrrh were used to burn and had a sweet aroma. They were also ingredients used in developing medicines.  These gifts were not only practical, but precious.

Jim and Della gave gifts that were also the same.  They were prized possessions but the gifts they bought were practical; combs for her hair and a chain for his watch.  They bought these things to add to the importance of their possessions, but in the end the greatest gift they had was their love for each other.

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Both Jim and Della gave up their most prized possession for one another; this symbolizes the way that lovers give all to one another.

Of course, the specific objects can be seen as having symbolic meaning; he gives away his watch (all his time); she gives away her hair (her beauty).

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