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O. Henry generally used one of five settings which were the American South, New York, the West, prison, or Central America. For The Gift of the Magi, he chose to set this story in New York.
He paid particular attention to the setting of Jim and Delia's immediate surroundings. Their poverty -stricken apartment that was furnished sparely and with tattered and worn furnishings, as well as the barren and lonely yard. The description of their isolated and poor setting adds to the mood that O. Henry wanted to create.
December of course Christmas time. I would say some where where threr's alot of poverty going on if they were short on money.
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