This holiday TV special opens in "Europe, a long time ago". Nicholas Claus, nicknamed "Santa" by his wife Gretchen, is a toymaker who wishes he could give a toy to every child in the world. It's explained that Nicholas grew up in the Angel's Island Orphanage, where he taught himself to make toys for the other children. However, Nicholas is now in debt because he gives away more toys than he sells. The Clauses are subsequently evicted by their greedy landlord, Mr. Minch.