(William F. Brewer)
(...) In the late 1800s it appears that reading was thought to be a serial processing of the letters making up words and then a serial combination of these words into sentences. However, this position was overthrown by a series of studies coming out of Wundt's laboratory soon after the founding of experimental psychology. Perhaps the most influential work opposed to the letter-by-letter theory was a series of studies carried out by James McK. Cattell [1885a, 1885b, 1886a, 1886b]. Carrell rejected the letter-by-letter (serial) theory of word perception in favor of the whole-word (parallel) approach on the basis of the following kinds of evidence: (a) Words in prose passages can be read almost as fast as lists of letters. (b) The immediate visual apprehension span for letters in prose is much greater than for random letters. (c) Latencies to initiate pronunciation of words are shorter than those for letters. (d) Visual recognition thresholds for words are lower than the thresholds for letters.
For the most part, serious research on the reading process stopped with the rise of behaviorism; however, among those few who continued to work in the area, Cattell's arguments were considered to have shown that word perception is parallel, not serial [Woodworth 1938]. (...)