From the American Stationer:
"The Santa Claus Association of New York, having received permission from the Postmaster General to obtain from post offices letters addressed to Santa Claus, was organized [in 1914] to distribute such letters as were found to be from worthy children, to people who care to accept one or more of them for the purpose of seeing that the youthful writers were substantially remembered at the Christmas season.So Frank D. Waterman took an active role in promoting and assisting the association's work -- including, it would appear, donating specially-marked pens for their use.
The Santa Claus Association and the members of Waterman's Ideal Ten-Year Club desired to perpetuate the work of the association and at the same time to recognize the many courtesies that Messrs. Muschenheim Brothers, proprietors of the Hotel Astor of New York, extended, because of their liberality in the donating of rooms and light for the handling of the enormous Christmas mail that the association had to investigate and distribute.
As a result, a life size bust of Santa Claus was made out of 5,000 of the Santa Claus letters and mounted upon marble. The bust is probably one of the most unique works of art ever executed in this country. It was made entirely by hand by the famous Belgian sculptor, Kratina, who has worked day and night since Christmas to finish it in time for the presentation, which was made on Thursday, March 18, to Mr. Muschenheim, by F. D. Waterman, president of Waterman's Ideal Ten-Year Club, and John D. Gluck, founder and secretary of the Santa Claus Association. Moving pictures of the occasion were made for the interest of the public generally."
UPDATE: There is an exhibition now open in Brooklyn devoted to the forgotten history of the Santa Claus Association. Read more about it here (the exhibition runs until February 10, 2013).