I've been doing some research into the development of the idea of teaching the classical languages using modern intuitive methods.
An early 'modern method' teacher, called Jean Manesca, appears to have written the first fully developed modern language course in the early 1820's - designed for French, he was keen to see it adopted for the classics, and actively promoted the idea. His "Oral system of teaching Living Languages Illustrated by a Practical Course of Lessons in the French through the medium of English" was entered at the library of Congress in 1834.
In his introduction, on pg xix, Manesca writes
" If I have not spoken of the advantages that may be derived from the present mode of teaching applied to dead languages, it is not because I entertain the smallest doubt of its efficacy in that particular; for, on the contrary, I am confident that many years of toilsome, tedious, and almost fruitless labours, would be saved by the adoption of such a method for these languages. A well disposed young man, between eighteen and twenty, well versed in the principles of his mother tongue, would, in twelve months, acquire a sufficient knowledge of Latin or Greek for all the purposes of life. Such a consideration well deserves the attention of the few scholars competent for a task which would prove so beneficial to the present and future generation of collegiate students. The present modes of teaching the dead languages are sadly defective. It is high time that a rational, uniform method should be adopted"
Shortly afterwards, Henri Ollendorff adopted Manesca's methodology, and produced the famous series of books using the 'Ollendorff' method, which follow Manesca extremely closely. I have revived Manesca's course, which I am using together with Ollendorff's French textbook, on http://fancyfrench.mypodcast.com , as it is well suited to podcasting, although the French isn't contemporary street French, it will be good for reading Balzac!
As I sit here, I hold in my hands a copy of the "Nouvelle methode pour apprendre, a lire, a ecrire et a parler une langue en six mois, appliquee au Latin" - by H G Ollendorff, written in the 1840's. Adler's American edition, which I am using was an extensive revision of Ollendorff's first Attempt - Adler includes the grammar - Ollendorff's French text is extremely light on the grammar, and is almost entirely intuitive, learning is based on practice alone, not theory. The book has 600 pages of very fine print, with copious, and I mean copious exercises. Adler also expanded the Latin text, resulting a much higher quality textbook, with much more elegant Latin, and a wider variety of examples based on the historical classic sources.
The French-Latin Ollendorff was, as far as I can ascertain, the first textbook written in modern times aimed at teaching Latin as a spoken language, using 'modern' methods - I don't think Manesc'a method was ever translated directly into Latin or Greek, although it did appear in a Spanish edition written by Carlos Rabadan. Albert Brisbane's Biography, where he describes in some detail his private classes with Manesca, says that he studied Latin using the same method. If Manesca ever wrote up any Latin exercises, I would be very keen to obtain them - perhaps they only survive in manuscript among his papers. The Ollendorff version went through several editions, and was quite popular for private pupils, but it was never taken up by schools for teaching Latin. Adler's American edition seems to have suffered the same fate, and copies of it are very hard to come by.
So, when people discuss teaching Latin as a spoken language, using modern teaching methods that involve speaking Latin in the classroom, it should be realized that this methodology has a long pedigree, it isn't the new fangled and dangerous thing that some Latin teachers seem to think it is.