“I had a big argument with Steve Ditko, who was drawing the strip at the time. When we had to reveal the identity of the Green Goblin, I wanted him to turn out to be the father of Harry Osborn, and Steve didn’t like that idea,” Lee explained. “He said, ‘no, I don’t think he should be anybody we’ve seen before.’ I said ‘Why?’ He said ‘Well, in real life, the bad guy doesn’t always turn out to be someone you’ve known.’ And I said, ‘Steve, people have been reading this book for months, for years, waiting to see who the Green Goblin really is. If we make him somebody that they’ve never seen before, I think they’ll be disappointed — but if he turns out to be Harry’s father, I think that’s an unusual dramatic twist that we can play with in future stories.’ And Steve said ‘Yeah, well, that’s not the way it would be in real life.’ And I said ‘In real life, there’s nobody called The Green Goblin.’ And so Steve was never happy about that, but since I was the editor, we did it my way.”
According to this essay, Ditko later claimed that the argument about the Goblin happened, but that it merely served as a "straw that broke the camel's back." It appears, then, that when Ditko worked on his next-to-last issue of AMAZING SPIDER-MAN, all of the setup elements in #37-- in which Norman Osborn assaults Spider-Man and seems implicated in the attempted murder of Professor Stromm-- were completed "under protest." Ditko then walked away from Marvel with SPIDER-MAN #38, obliging Lee to coinplete the remainder of the Green Goblin story in #39 and #40 with the artistic aid of John Romita.
It's interesting that in this much later expatiation about the Green Goblin story, Lee emphasizes "an unusual dramatic twist that we can play with in future stories." In 1966, though Lee couldn't have known back then how long the Spider-Man franchise would last, he must have guessed that the concept had more than a few good years in it. However, there's no indication in the previous Lee-Ditko stories that either creator had much of an idea about what I'd call "the myth of the Green Goblin." He was, in all of his appearances, simply a masked mystery villain who haunted the hero's tracks. Lee and Ditko occasionally exploited the mystery of the Goblin's identity very briefly, but there was no real sense as to why he was more of a menace than, say, Mysterio. Even the story in #39-- the punnily-titled "How Green Was My Goblin"-- is little more than set-up.
However, "Spidey" in #40 shows Lee going from zero to sixty. For all the blather from fans who want to believe that Lee's artists created the whole show, it's patently absurd to think that John Romita--who had just assumed the job, and who subsequently claimed that he assumed Ditko would eventually return to the feature-- was the primary creative force here. Lee understood that continuing readers wanted a payoff, and thus he almost certainly reverted back to the much-lauded moment in SPIDER-MAN #10, where Jonah Jameson reveals his jealousy of the featured hero in a self-examining soliloquy.
The bulk of the story falls into two main sections. It begins with an unmasked Spidey chained and captive in the Goblin's lab, and trying to get the villain-- who has just revealed his identity-- to keep talking until Spidey can break free. The Goblin does indeed keep talking, revealing his origin as he does so, and then he sets the hero free for a culminating fight. The hero wins, but with the knowledge that even if the villain goes to jail, he'll reveal Spidey's identity. Fortunately for the hero, Norman loses his memory of ever having been the Goblin. For a time, his threat was ended, though every time the character re-appeared, Lee teased the reader with the possibility that the Goblin might still return, as indeed he did, though not for several years.
It's the origin, though, that gives the story the mythic resonance earlier Goblin stories did not have. In essence, it's a Jekyll and Hyde story, but one in which the villain is changed by accident, a la the Hulk. But unlike the majority of latter-day Jekylls, Norman happens to be a father, whose son Harry is one of Peter Parker's friends.
While Norman tells Peter the story of his origins, he ends up revealing that his idea of being a father is tied up in conspicuous consumption:
Note that in the second panel, Norman considers his excellence as a parent dependent on what other people would think:"I wanted everyone to see what a great father [Harry] had." Lee's main purpose in making Norman a ruthless businessman was to show how he had lost his way: that he'd become obsessed with making money, deluding himself that he was doing it for Harry. Thus he's a Jekyll who's already given in to his dark side before he ever comes across the "Hyde formula"-- which he examines for no reason but to see if it can make him more money. Significantly, the formula was created by Professor Stromm, the man Norman sent to jail, so in a sense Norman's transformation into the Goblin might be seen as Stromm's revenge.
I would imagine that the main reason that Lee has the formula turn green before it explodes in Norman's face was to give a reason as to why he later chose to become a green-hued super-villain.
Still, it's interesting that, though Lee doesn't make the connection, one of the main associations of the color is that of-- money. One thing neither Lee nor his collaborators even comment on, even subconsciously, is the question as to why a tough-minded businessman would chosen a Halloween motif for his super-villain costume. I realize that originally Lee and Ditko merely wanted a mystery villain with no particular motive for riding a mechanical broomstick and tossing explosive pumpkins. Yet, since a goblin is one of many impish creatures who were designed to be caricatures of human beings, Norman's decision to become a murderous man-witch makes a certain amount of sense.