For their timely little musical, “The Gifts of the Magi,” now in a sweetly realized production by Porchlight Music Theatre, Mark St.-Germain and Randy Courts have interwoven two stories by that early 20th century short story master, O. Henry, both set in Christmastime Manhattan.

The most famous story is the one about love and sacrifice that is the source of the title (though the single “gift” of the original has been pluralized here). The other is a lesser-known tale, “The Cop and the Anthem,” which, as it happens, also was the inspiration for the Freddie the Freeloader character on “The Red Skelton Show” in the 1950s.

Intriguingly, the “character” that emerges most strongly in this musical is that of New York City itself — a place of dramatic class differences, grand dreams, dashed hopes, petty crime, greed and grand extravagance, skillful adaptation and the scourge of unemployment so exacerbated by the spend-and-smile holiday season. O. Henry (whose colorful life itself had all the makings of a musical) clearly had a firsthand knowledge of the place.

Jim Dillingham (Jason Richards, who very forcefully captures the desperation of slammed doors and joblessness), and his beautiful wife, Della (graceful, cameo-faced Chelsea Morgan, in her Chicago debut), are transplants to the city — farm kids in love since grade school. They are now living in a tiny furnished studio and are down to their last penny because, despite all his fervent efforts, Jim cannot find a job. In fact, it has come to the point where he bristles at his overly-encouraging young wife simply out of frustration and despair.

Meanwhile, animating the streets of New York are Willy Porter (the wholly charming Nate Lewellyn), an enterprising newsboy, and Soapy Smith (the very fleet and funny Kevin McKillip, who soft-shoes through his role with vaudevillian style). An ingenious, work-allergic, park bench bum with a taste for the high life, Soapy’s main goal is to get himself arrested so he can sleep through the holidays in the warmth of a prison cell. A cosmopolitan couple (played by Heather Townsend and Gerald Richardson), form the morphing chorus, suggesting snooty socialites as well as clerks and waiters.

Opening up the “Magi” story turns out to be a mixed blessing, with some of the jewel box-like intimacy and intensity of the Dillinghams’ devotion and gift-giving becoming dispersed. But the show, directed by Mark E. Lococo and choreographed by Brenda Didier, has a lovely, character-defining score that is being beautifully sung here. Elizabeth Doran’s musical direction is impeccable, as is her lush piano accompaniment, with Christina Foster and Brent Roman on percussion.

Bill Morey’s turn-of-the-century costumes are ideal. And set designer William Boles’ backdrop of a vintage Sears, Roebuck catalogue page gives a hint of capitalism’s enduring little enticements.