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"Christmas-Eve" is an account of a vision in which the narrator is taken to a Nonconformist church, to St. Peter's in Rome, to a Göttingen lecture theatre where a practitioner of the Higher criticism is discoursing on the Christian myth, and back to the Nonconformist church.
Modern American creationism arose out of the theological split over modernist higher criticism and its rejection by the Fundamentalist Christian movement which promoted Biblical literalism and, post 1920, took up the anti-evolution cause led by William Jennings Bryan.
Following the earlier German Higher Critics, who argued for a historical approach to religious texts, David Strauss published Leben Jesu or The Life of Jesus, Critically Examined which argued that the events of the New Testament were not historical but rather mythical.
The "higher criticism" that Hardy refers to is criticism that refutes the literal truth of Biblical Scripture, and gives scientific evidence against the supposed revealed truth of the Bible.