Christmas Toyshop is a 1945 live-action/animated short film, directed by Frank Moser and Paul Terry. Most of the short features footage from an earlier Terrytoon animated short from 1935, Ye Olde Toy Shop.
The one-reel black & white Christmas Toyshop (1945) begins as live action of a family sitting around the radio, a show having just ended on Christmas eve, & now it's time for the children to go to bed.
Peter & Connie are sent off to bed with a nighty-night. Mom & dad will start arranging the Christmas tree & morning surprises from Santa as soon as the kids are sleeping.
Mr. Sandman appears in the kids' room sprinkling sand in their eyes. I don't think he was supposed to be so creepy, but it's sure understandable why somebody grew up to make horror movies about the Sand Man.
Framed so as not to be too certainly a dream, Santa unexpectedly falls down the chimney very clumsily, waking the children, who run out to greet him.
They're too excited to sleep so Santa puts his arms around them & tells them about a toy shop way up north.
And right there's where the cartoon begins. When the toymaker goes home at night, the toys all come to life, singing & dancing.
A night of fun & revelry is shown as toys put on a vaudeville show for each other, dance throughout the shop & even outside onto the snowy roof.
A giant villainous spider interrupts the festivities when he lowers himself to frighten Miss Muffet. Toy soldiers & Indians rush to rescue the doll flrom the villain, who has put Miss Muffet in a spider web in order to fight the hordes of toys.
The doll is saved from doom, & does a Shirley Temple dance with the toy soldiers. By then the children are asleep in Santa's lap & when they wake up, the tree is decorated, the toys arrayed beneath, & Dad is dressed up unconvincingly as Santa. They're not fooled by him for a second, as they both remember the dream of the real Santa.
The cartoon that takes up the middle of the film is obviously of older vintage than the live action frame. The distributor, Official Films, was known to buy up old films to reissue as one-reel home-view movies on 8 mm & 16 mm reels. When they obtained the Terrytoon Ye Olde Toy Shop (1935), they produced the anonymously directed live action portions to frame the original cartoon & stretch it out to a full-reel ten minute reel.