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Santa Claus lives in the Laughing Valley, where stands the big,
rambling castle in which his toys are manufactured. His workmen,
selected from the ryls, knooks, pixies and fairies, live with him, and
every one is as busy as can be from one year’s end to another.

It is called the Laughing Valley because everything there is happy
and gay. The brook chuckles to itself as it leaps rollicking between
its green banks; the wind whistles merrily in the trees; the sunbeams
dance lightly over the soft grass, and the violets and wild flowers
look smilingly up from their green nests. To laugh one needs to be
happy; to be happy one needs to be content. And throughout the
Laughing Valley of Santa Claus contentment reigns supreme.

On one side is the mighty Forest of Burzee. At the other side stands
the huge mountain that contains the Caves of the Daemons. And between
them the Valley lies smiling and peaceful.

One would thing that our good old Santa Claus, who devotes his days to
making children happy, would have no enemies on all the earth; and, as
a matter of fact, for a long period of time he encountered nothing but
love wherever he might go.

But the Daemons who live in the mountain caves grew to hate Santa Claus
very much, and all for the simple reason that he made children happy.

The Caves of the Daemons are five in number. A broad pathway leads
up to the first cave, which is a finely arched cavern at the foot of
the mountain, the entrance being beautifully carved and decorated. In
it resides the Daemon of Selfishness. Back of this is another cavern
inhabited by the Daemon of Envy. The cave of the Daemon of Hatred is
next in order, and through this one passes to the home of the Daemon
of Malice–situated in a dark and fearful cave in the very heart of
the mountain. I do not know what lies beyond this. Some say there
are terrible pitfalls leading to death and destruction, and this may
very well be true. However, from each one of the four caves mentioned
there is a small, narrow tunnel leading to the fifth cave–a cozy
little room occupied by the Daemon of Repentance. And as the rocky
floors of these passages are well worn by the track of passing feet, I
judge that many wanderers in the Caves of the Daemons have escaped
through the tunnels to the abode of the Daemon of Repentance, who is
said to be a pleasant sort of fellow who gladly opens for one a little
door admitting you into fresh air and sunshine again.

Well, these Daemons of the Caves, thinking they had great cause to
dislike old Santa Claus, held a meeting one day to discuss the matter.

“I’m really getting lonesome,” said the Daemon of Selfishness. “For
Santa Claus distributes so many pretty Christmas gifts to all the
children that they become happy and generous, through his example, and
keep away from my cave.”

“I’m having the same trouble,” rejoined the Daemon of Envy. “The
little ones seem quite content with Santa Claus, and there are few,
indeed, that I can coax to become envious.”

“And that makes it bad for me!” declared the Daemon of Hatred. “For
if no children pass through the Caves of Selfishness and Envy, none
can get to MY cavern.”

“Or to mine,” added the Daemon of Malice.

“For my part,” said the Daemon of Repentance, “it is easily seen that
if children do not visit your caves they have no need to visit mine;
so that I am quite as neglected as you are.”