In The Silmarillion, Elves and Man are the Children of Ilúvatar (God, the Primary Creator), while the Dwarves are the creation of a lesser god called Aulë. Reading the description of Aulë -- a smith-god who bears a hammer and whose consort is (like Venus before her assimilation to Aphrodite) a goddess of vegetation -- one automatically thinks, "Okay, this is Tolkien's name for Vulcan." Bill and Leo, however, identify him with a very different figure: Abraham.
I'm starting to come over to this view myself.
According to The Silmarillion, Aulë, unwilling to wait for Ilúvatar to create the Children (Elves and Men), secretly creates the Seven Fathers of the Dwarves, is pleased with them, and begins to instruct them in speech. However, Ilúvatar, who sees even what is done in secret, reprimands him:
And the voice of Ilúvatar said to him: 'Why hast thou done this? Why dost thou attempt a thing which thou knowest is beyond thy power and thy authority? For thous hast from me as a gift thy own being only, and no more; and therefore the creatures of thy hand and mind can live only by that being, moving when thou thinkest to move them, and if thy thought be elsewhere, standing idle. Is that thy desire?'Then Aulë answered: 'I did not desire such lordship. I desired things other than I am, to love and to teach them . . . . But what shall I do now, so that thou be not angry with me for ever? As a child to his father, I offer to thee these things, the work of the hands which thou hast made. Do with them what thou wilt. But should I not rather destroy the work of my presumption?'Then Aulë took up a great hammer to smite the Dwarves; and he wept. But Ilúvatar had compassion upon Aulë and his desire, because of his humility; and the Dwarves shrank from the hammer and were afraid, and they bowed down their heads and begged for mercy. And the voice of Ilúvatar said to Aule: 'Thy offer I accepted even as it was made. Dost thou not see that these things have now a life of their own, and speak with their own voices? Else they would not have flinched from thy blow, nor from any command of thy will.' Then Aulë cast down his hammer and was glad, and he gave thanks to Ilúvatar, saying: 'May Eru bless my work and amend it!'
So Aulë created the Dwarves, but it was Eru Ilúvatar who truly gave them life as independent Beings. Later we learn that it was from stone that the Dwarves were fashioned:
Aforetime it was held among the Elves in Middle-Earth that dying the Dwarves returned to the earth and the stone of which they were made; yet that is not their own belief.
This story clearly parallels that of the Binding of Isaac. Like Abraham, Aulë is willing to murder his own "offspring" as an offering to God because he believes that is what God wants. In both stories, God accepts the offering in the spirit in which it is made but prevents the murder.
The biblical story has Abraham raising a knife to kill a single boy bound to an altar, but Tolkien's imagery -- of Aulë raising his hammer to smite multiple people made of stone -- is also very Abrahamic:
The two paintings above depict a traditional story about Abraham which didn't make it into the Bible but appears, among other places, in the Quran and in the midrash Genesis Rabbah. In the story, Abraham smashes the idols worshiped by his father, Terah, as a way of proving that they are not true gods. In the Quranic version of the story, Abraham emphasizes that the stone idols' inability to speak as proof that they are not alive and deserve no respect. This corresponds nicely with the reason given in The Silmarillion for not smashing the stone people: "Dost thou not see that these things have now a life of their own, and speak with their own voices?"
Also fitting curiously well into the Aulë story is a strange statement attributed to Jesus in the Gospels of Matthew and Luke:
And think not to say within yourselves, We have Abraham to our father: for I say unto you, that God is able of these stones to raise up children unto Abraham (Matt. 3:9, Luke 3:8).
How is God able to do that? Even an omnipotent Supergod would not be able to paint a genuine Rembrandt, for the simple reason that, by definition, only Rembrandt can do that. In the same way, even if God could turn stones into children, they wouldn't be Abraham's children unless they were produced by Abraham. If you replace Abraham with Aulë, though, this "hard saying" becomes intelligible. The Dwarves were Aulë's children, created by him from stones, but it was God who "raised them up" to the status of true children.
Isaiah, too, uses the imagery of Abraham's children being made from stone:
Hearken to me, ye that follow after righteousness, ye that seek the Lord: look unto the rock whence ye are hewn, and to the hole of the pit whence ye are digged. Look unto Abraham your father, and unto Sarah that bare you: for I called him alone, and blessed him, and increased him (Isa. 51:1-2).
One more curious link between the Abraham and Aulë stories. Recall that the clearest parallel with Aulë is the story of Abraham's near sacrifice of one of his sons (Isaac or Ishmael, depending on which holy book you read), corresponding to Aulë's near sacrifice of Durin and the other Fathers of the Dwarves. The Abraham episode is set in a place with a very interesting name:
And he said, Take now thy son, thine only son Isaac, whom thou lovest, and get thee into the land of Moriah; and offer him there for a burnt offering upon one of the mountains which I will tell thee of (Gen. 22:2).
This is virtually identical to the Tolkien place-name Moria, also known as Khazad-dûm. This is the greatest city of the Dwarves, supposed to have been founded by Durin himself. The identity of the biblical Moriah is unknown. The Jews later identified it with the Temple Mount in Jerusalem, but the Samaritans thought it was their holy mountain, Gerizim, and the Muslims place it in Mecca. These theories are so obviously motivated that it is hard to give them any historical credence. Moriah could have been anywhere.
What is to be made of the parallels discussed in this post. The “sane” explanation, of course, is that Tolkien, as a Christian, drew inspiration from the Bible and, as a highly educated man, was likely aware of some of the apocryphal stories about Abraham as well.
The less sane, but more interesting, theory is that Tolkien acquired by direct inspiration a true (but likely somewhat garbled) account of real events in the distant past, and that a differently-garbled version of these same events has come down to us in the various traditions about Abraham.
