Well, no new guesses... So, here is the answer:
The story was written by Robert May as a promotional give-away book for Montgomery Ward during the Christmas season (1939, I think). He worked as a copy writer for the department store chain. Several years later, his brother-in-law, Johnny Marks, made the story into a song (1949, I think); and later singing cowboy (and Angels baseball team owner) Gene Autry reluctantly recorded the song... and the rest is history.
So, the answer is that the story was created as a marketing effort for Montgomery Ward's Christmas program. They had been buying and giving away coloring books and story books each Christmas; and they wanted one that they did not have to buy. And they hit upon magic!
By the way, it is Gene Autry's recorded version that is responsible for the Americanization of the reindeer Donder's name. He starts the song by saying, "Well, you know Dasher and Dancer, and Prancer and Vixen, Comet and Cupid, and DONNER (no "D") and Blitzen... but do you recall the most famous reindeer of all...."
After he (perhaps accidentally) dropped the "D" from the otherwise German "Donder" that had been known before, many Americans followed; and "Donder" became "Donner" in much literature!
Anyhow, sorry for the thread drift... but I couldn't help it!!
I actually think that the Montgomery Ward merchandising tie-in was very similar to the way that Walt Disney himself often did things. (His first Christmas special was promotional tie-in to Alice in Wonderland, and the second was the same for Peter Pan!) So, this just made me think of that!!
Anyhow, back the CBJ Christmas! (Hey, as hot as it is here, "We need a little Christmas!")
Paul