Whole books have been written on the subject of why philology gave way to
linguistics. In one of the more recent studies, a chapter called "Literary
Study and the Disciplines" in the book Disciplinarity at the Fin de
Siecle (2002), the authors state, "The decline of philology is a conspicous
and puzzling fact...." So, I'm not going to pretend to have any answers,
but I can tell you that several studies focus on the competing claims of
philology and belles lettres in university English programs of the late
nineteenth century.
Philology was the new discipine which laid claims to being scientific, to
revealing facts and laws about language, and it required detailed study of
early languages (hence the Anglo-Saxon requirements that still survive in some
English programs). Belles lettres had traditionally been concerned with
literary "appreciation," with making moral and aesthetic judgements, but it
could not claim to be a coherent discipline consisting of laws and facts and
research methods the way the philologists did. The philologists gained the
upper hand for a time, but the philologists also found that in order to talk
about literature in their classes, they needed to use the approaches of
the bellelettrists. "Lang" and "lit" couldn't stay completely
divided. As university curricula divided more clearly into the arts and
sciences, the philologists -- in their claims to being scientific -- lost
ground when left in the arts division. Linguistics evolved into the
"scientific" study of language divorced from literary "appreciation." I think
that the only people who are closest to being philologists left in English
departments today are those who study medieval languages and literatures.
Gerald Graff has an interesting book on this called Professing
Literature, and he's put together an anthology of documents about the
subject with Michael Warner (sorry, I can't remember the title). [oops --
three
paragraphs!]
