Will Porter, known to the world as O. Henry, lived in the state capital as a young man, and his wood-frame house still stands a century later at the corner of Neches and East Fifth streets, restored as the O. Henry Museum. It is a modest ornament on the eastern edge of downtown, an area where vagabonds congregate, not far from railroad tracks, warehouses and the Colorado River.

Those are ingredients enough for an O. Henry short story. It would be a Christmas story, no doubt, for this is Christmas Day and O. Henry's writings are rich with the season's sentiments. "The Gift of the Magi," in which Della cuts her luxuriant hair and sells it to buy a platinum fob for her husband Jim -- only to find that Jim has exchanged his watch to buy Della a set of combs for her prized locks -- is a holiday classic, with a message so warm that it overcomes its own triteness.

O. Henry wrote other Christmas stories, and one of his first, "Whistling Dick's Christmas Stocking," is more suitable for present purposes. Whistling Dick is a hobo who arrives in New Orleans, meanders along the Mississippi riverfront, stops at a plantation, where he thwarts an armed robbery, and then moves on with a departing whistle as "clear as the cleanest notes of the piccolo."

The stories of O. Henry are peopled by scores of Whistling Dicks. He wrote about the downtrodden, the depressed, the out-of-luck, and yet usually, somewhere in his characters' souls, he found that clean, clear whistle of hope, even romance. Which brings us back to the O. Henry Museum and some of the characters who have paid visits there.

The house on East Fifth Street is a small one, painted green, with a rear porch that leads to a large yard. Sometimes the bums of central Texas camp on the lawn. Martha George, the museum's curator, has grown accustomed to their presence. Now and then, though, they get a little too noisy out back.

Not long ago, George was trying to work in her office, a first-floor closet, when two drifters settled on the back porch for an afternoon's conversation. Shortly their demeanor turned to rowdiness, and George felt obliged to scold them.

"Hey, out there, quiet down!" she yelled out the window. "Or move on. This is a museum."

One can never predict how a stranger will respond at a first encounter. "One of the fellows, a black man, got all real proper when I yelled at them," George recalled. "He got up, rapped on the door and, like a perfect gentleman, asked me if this was the O. Henry Museum and, if so, what kind of information we had on O. Henry."

"Why yes, come in," said George, and then began a long afternoon in which the curator listened to a bum's life. It turned out that this drifter, whose name George never asked for, had grown up in Washington, D.C., studied at West Virginia University and worked for several years as a clerk in a federal agency. He had a bad turn of luck, never specified, and had been knocking about for years.

The curator and her disheveled guest moved from room to room in the museum that day, stopping here to admire the living room piano, there to examine an old framed copy of "The Gift of the Magi," and walking into the parlor to look at a copy of the weekly newspaper O. Henry had published during his days in Austin. The bum knew some things about the writer, but even more about the period, the last decade of the 19th century and the first of the 20th.

It was an afternoon during which the visitor gave as much as he took. But it had to end. The other vagrant was still out on the porch, becoming so obnoxious that George had to remove him from the premises. Her new-found O. Henry buff, his mind refreshed and perhaps a bit of his self-esteem restored, moved on as well, the two drifters ambling down the yard toward the tracks and the river.

There are other vagabonds who visit O. Henry's house regularly. One has offered to help refinish the old wooden floors. Another, known as the Poet, seeks out George so he can read her his latest efforts in verse.

"He's a literary transient, I guess," she said. "There's no doubting that he's a drifter, but he loves this house -- it must mean something special to him. He'll come in here and show me his poetry. He writes it on whatever scraps of paper he can find out there, old loose-leaf, newspapers. And it's rather good, actually. Sort of reminds me of Edna St. Vincent Millay."

Most readers associate O. Henry with New York City, where he lived the last and most productive years of his life, writing 381 short stories from 1902 to 1910. But Austin is where William Sydney Porter evolved into O. Henry and where his gentle, ironic and forgiving literary voice, the one that made him an oracle of Christmas, was formed.

Will Porter was born in 1862 on a farm near Greensboro, N.C., and was educated by his aunt, "Miss Lina." As a teen-ager he worked at the local drugstore and became a licensed pharmacist. He developed a serious cough, and in 1882, at age 19, he left North Carolina for the fresh air of Texas. For two years he lived on a ranch, sometimes working as a handyman or cook, more often reading and daydreaming in the ranch house library.

When he was 21, Porter moved to Austin. Like so many modern-day pilgrims to this pleasant city, he was more interested in enjoying life than in becoming famous. He played the guitar and sang baritone for the Hill City Quartette. His first job was at Harrell's Cigar Store, and from there he moved on to a drugstore and a real estate office. In 1887 he married Athol Estes and got another job, this time as a draftsman in the state land office. The assignment was a political plum, and Porter lost it four years later when Texas changed governors.

The First National Bank of Austin offered Porter a job as a teller. He was terrible with money, but it seemed to matter little at this bank, where the officers and tellers were loose with accounts, loans and drafts. As the museum curator has written, "The bank was operated in the tradition of the Old West, with a free and easy informality, and Will, always the dreamer, had difficulty keeping track of his books."

In 1894, Porter started his own weekly newspaper in Austin. It was called The Rolling Stone; its motto: "Out for the Moss." It was an odd, amusing paper, full of doggerel, strange bits of news and gossip, satire and the beginnings of the short stories that would make O. Henry famous years later. The newspaper lost money, Athol's health deteriorated, and Will Porter took some money from the bank to keep afloat.

That Porter paid the money back mattered little. He had embezzled it. Bank officials tried to minimize the offense and protect their well-liked employe, but federal bank examiners from Washington sought his indictment. Porter fled to New Orleans, drifted around the French Quarter for several months and then took a banana boat to Honduras. New Orleans provided him with the material for "Whistling Dick" and a few other stories, including "The Renaissance at Charleroi" and "Blind Man's Holiday." Honduras was the setting for his first book, "Cabbages and Kings."

While exiled in Honduras, Porter was touched by an experience reminiscent of his fictional "Magi." Athol, back in Austin with their daughter, was very sick in the early winter of 1896. But she wanted to earn some money to buy Christmas presents for her husband, so she made a point-lace handkerchief and sold it for about $25. Her temperature was 104 degrees the night she packed the presents. When Porter learned of this and realized his wife was dying, he returned to Austin to face trial. Athol died before the trial began.

Porter was presented with two charges: of taking $554.48 on Oct. 10, 1894, and $229.60 on Nov. 12, 1894. The jury found him guilty, and he was sentenced to five years in prison.

On April 25, 1898, he entered the federal pen in Columbus, Ohio, broken and humiliated. But soon he became the prison druggist and slept on a cot in the prison hospital. He wanted to write and had the time to do it. O. Henry was born.

The O. Henry Museum on East Fifth Street attracts about 15,000 visitors a year, not including the vagrants who fail to sign the guest book in the front lobby. They come from all over the world to see this little house. Those who show the most reverence for O. Henry tend to be foreigners.

In America, since the 1930s, literary critics have dismissed O. Henry as a minor figure who abused his talents by writing quickly and for the masses. Most of his stories, including "The Gift of the Magi," were written on deadline for the New York Sunday World, and that, they say, is no way for a gifted writer to function or for serious themes to be developed.

But in other countries, especially the Soviet Union and Japan, O. Henry is beloved. The Russians consider him in the same light as Jack London: an American author with the courage and insight to depict the underbelly of capitalism. But although O. Henry wrote movingly about shopgirls and bums, he never ascribed political import to his stories.

Still, the Soviets love O. Henry, and that is that. In 1962, on the 100th anniversary of his birth, they issued a commemorative O. Henry stamp, something the United States did not do. One Soviet diplomat makes a side trip to East Fifth Street whenever he travels in the Southwest. He roams from room to room, pointing out the antiques and memorabilia as if they were those of his great-uncle. He signs the guest book. Pavel Kurilov's name appears there twice. Curator George remembers the visits -- and what followed.

"The next day we would get a visit from the FBI," said George. "The agents would be nice enough, though they knew far less about O. Henry than the Russians. They would say they were just checking signatures."

If FBI agents were to visit O. Henry's house this week, they would see an interesting signature between two guests from Brazil and several from Japan. It is "A Right Jolly Ole Elf from the North Pole." Elves are always welcome at O. Henry's house. It is a place for those who give, for the Magi.

"The magi, as you know, were wise men -- wonderfully wise men -- who brought gifts to the Babe in the manger," O. Henry wrote at the end of his most famous short story. "They invented the art of giving Christmas presents. Being wise, their gifts were no doubt wise ones, possibly bearing the privilege of exchange in case of duplication. And here I have lamely related to you the uneventful chronicle of two foolish children in a flat who most unwisely sacrificed for each other the greatest treasures of their house. But in a last word to the wise of these days let it be said that of all who give gifts these two were the wisest. Of all who give and receive gifts, such as they are wisest. Everywhere they are wisest. They are the magi."