When did this split in language happen? What caused it?
Google Ngrams thankfully have separate American and British corpora. Here’s merry Christmas and happy Christmas compared in [the Google Books American corpus](https://books.google.com/ngrams/graph?content=Merry+Christmas%2Chappy+Christmas&case_insensitive=on&year_start=1800&year_end=2000&corpus=17&smoothing=3&share=&direct_url=t4%3B%2CMerry%20Christmas%3B%2Cc0%3B%2Cs0%3B%3BMerry%20Christmas%3B%2Cc0%3B%3Bmerry%20Christmas%3B%2Cc0%3B%3BMERRY%20CHRISTMAS%3B%2Cc0%3B.t4%3B%2Chappy%20Christmas%3B%2Cc0%3B%2Cs0%3B%3Bhappy%20Christmas%3B%2Cc0%3B%3BHappy%20Christmas%3B%2Cc0%3B%3BHAPPY%20CHRISTMAS%3B%2Cc0) and the [Google Books British corpus](https://books.google.com/ngrams/graph?content=Merry+Christmas%2Chappy+Christmas&case_insensitive=on&year_start=1800&year_end=2000&corpus=18&smoothing=3&share=&direct_url=t4%3B%2CMerry%20Christmas%3B%2Cc0%3B%2Cs0%3B%3Bmerry%20Christmas%3B%2Cc0%3B%3BMerry%20Christmas%3B%2Cc0%3B%3BMERRY%20CHRISTMAS%3B%2Cc0%3B.t4%3B%2Chappy%20Christmas%3B%2Cc0%3B%2Cs0%3B%3Bhappy%20Christmas%3B%2Cc0%3B%3BHappy%20Christmas%3B%2Cc0%3B%3BHAPPY%20CHRISTMAS%3B%2Cc0).
Changes in total usage probably mostly reflects what gets included (the late 20th century data includes a lot of scientific volumes) so pay attention mainly to the ratio of happy to merry. Similarly, keep in mind this is written, rather than spoken, data.
What we see, though, is that merry Christmas is actually the more popular in both countries, the big difference being that happy Christmas is an acceptable alternative in Britain (for the late 20th century, somewhere in the range of 3:2 and 3:1) while it is a much less common alternative in America (about 10:1). Again, these are total usages, not just well wishes.
The decisive change seems to have come early in the 19th century, likely tied to increasing consumption by the middle class of mass printed material, but many linguistic changes are random (there was an interesting linguistics paper arguing this point) and I don’t know much about this phrase.
One small, interesting thing: in England, people talk about a [U and non-U distinction varieties of English speech](https://en.wikipedia.org/wiki/U_and_non-U_English), where U essentially stands for the upperclass. Happy Christmas tends to be associated with U English, being more often used for example on Royal holiday greeting cards. Here’s [Prince Charles and Camilla’s](http://www.dailymail.co.uk/news/article-2247925/Merry-Christmas-Charles-Camilla-Spirit-Diamond-Jubilee-kept-alive-royal-couples-official-card.html), for example (notice the very non-U *Daily Mail* consistently translates this as Merry Christmas in their writing about the card). The existence of that distinction *may* have helped keep Happy Christmas alive in Britain even though Merry Christmas has been consistently more popular on both sides of the Atlantic for more than 200 years.
Whaddaya Say?