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'He's sitting on my desk."

The speaker is Fred Eaton, former chair of the defunct family department store that had as much to do with Canada's idea of Christmas as did Charles Dickens's stories, Clement Clarke Moore's poetry or Coca-Cola's advertising.

It was Eaton's that launched the Santa Claus Parade more than a century ago and inspired copycat parades in almost every small city and town in the country.

It was Eaton's that created Toyland, Eaton's that sent out the Christmas Wish catalogue, setting millions of young dreams in motion.

And Eaton's that gave the world Punkinhead.

There are still Santa Claus parades and every store has a Christmas toy display - but whatever became of Punkinhead?

"Just a minute," Eaton says from his Toronto office, "I'll go get him."

There are sounds of movement as the 69-year-old great-grandson of Timothy Eaton heads for the table that holds the once-famous little bear with the topknot.

He picks up his fuzzy treasure, describes what the bear is wearing - a green sweater with "Punkinhead" stitched on the front and red stripes around the cuffs and bottom - and then reads a long attached poem that supposedly comes from the little bear's grandmother.

"I've been thinking of you

"In case of chilly weather

"I couldn't make the sun shine

"So I knit you a sweater..."

Punkinhead, "The Sad Little Bear," was created by Eaton's in 1947 to serve as Santa's sidekick. He was designed by Winnipeg's Charlie Thorson, a remarkable artist who is also credited with creating Bugs Bunny and Elmer the Safety Elephant.

To say Punkinhead took off is an understatement. In Canada, he became the equal of Rudolph the Red-Nosed Reindeer. He was featured in a story about the little bear who ends up leading the parade and in a dozen other little books. There were Eaton's-sponsored radio programs featuring both Santa and his little bear friend. Kids wore Punkinhead watches, toques, mittens. They ate out of Punkinhead bowls and drank from Punkinhead mugs. There was Punkinhead furniture - rocking horses, chairs - and even an official Punkinhead song.

"He was a big star," Eaton says. "I had to learn to play the song on the piano - but I can't remember a note of it today."

He does, however, remember other things, in particular the close connection between the family business and the business of Santa Claus.

"My father was on pretty good terms with him," he laughs.

Eaton and his brothers would stand with their father as the parade made its annual "pilgrimage" to the Toronto Queen Street store. The last float, the one with Santa, and later also with Punkinhead, would pull up behind on a side street that no longer exists, and Santa would then enter the main store through a window.

"He'd say 'Hi there, Mr. Eaton' and our father would say, 'Hello, Santa - here are my sons.' And we'd all meet him."

The scenario would be repeated at the other major Eaton's stores in Montreal and Winnipeg, but the young Eatons would greet Santa just at the Toronto main store. For years they believed not only that he was the real Santa Claus but that he had chosen the Eaton family store as the logical place to launch each Christmas season.

"It didn't take a real genius to figure out what it was all about," Eaton remembers.

The link was so strong - Santa arriving at the Queen Street store to launch the shopping season, the magically animated store windows, kids all over the country cutting their wishes out of the Eaton's catalogue to paste on refrigerators and hope that a parent might take the hint, long lineups of kids to sit on Santa's knee and be handed a Punkinhead book by the famous little bear himself - that it seems impossible to Fred Eaton that such innocence has somehow become so controversial.

Each winter, it seems, there are more and more politically correct absurdities to add to the list:

In Ottawa, the grades-2-and-3 Elmdale Public School choir drops the word "Christmas" from a carol and replaced the word with "festive" so as not to offend anyone.

In Australia, John Oakes, a 70-year-old department store Santa, is sacked for going "Ho! Ho! Ho!" instead of the newly recommended "Ha! Ha! Ha!" - to make sure no one thinks kindly old St. Nick is shouting out street slang for "whore."

In Washington, the United States Surgeon General, apparently concerned about rising obesity, slags Santa for being a lousy role model with his pot belly and fat cheeks.

"It's bad for little kids to see fat old men," Fred Eaton says with open sarcasm.

Each December, he and old friends will gather in a private Toronto club where they get as politically incorrect as they wish in the lead-up to the big day.

"We can say whatever we like in there," he says.

"It's not a 'Holiday' tree - it's a 'Christmas' tree!"

And somewhere, a "Sad Little Bear" is smiling.

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