So when exactly did this change? When did it go from "worldly" people will survive to they won't survive? Did this all happen in 1935?
The shift actually started a few years earlier in 1931-1932, when Rutherford published his three-volume Vindication which laid out in detail his new doctrine of the "vindication of God's name". Rutherford viewed this as the very reason for Armageddon (i.e. God will prove Satan wrong and defeat him), and also used it to explain why Armageddon has been seemingly delayed since 1914: the period from 1919 until Armageddon is a special time for God's people to prove to Satan that they will stand firm and not reject Jehovah. Thus, it is a time of testing and persecution for them, for they are the modern-day antitype of Job whom Satan also persecuted to shake his integrity. Since he redefined Armageddon as a test of integrity in vindicating Jehovah's name, Rutherford began to speak of only a small "remnant" surviving the perseuction into the new world. The majority of humanity will not pass the test, for they do not vindicate Jehovah...they are part of "Satan's Organization". At this time, he got rid of Russell's "ransom for all" belief because it did not fit in with his dualist division of humanity into "God's Organization" and "Satan's Organization". Similarly, Rutherford gave up any positive expectations of the Jews in 1931 because he realized that they do not vindicate Jehovah as well. Rutherford even claimed that the vast majority of the people who have died will not be resurrected because they "defamed God's holy name" (Watchtower, 15 October 1938, p. 311). It is no small coincidence that Rutherford renamed the Bible Students "Jehovah's witnesses" in 1931.
Something else happened at the same time Rutherford was changing his views on Armageddon. Rutherford taught that the "remnant" of the 144,000 (led by himself) would keep decreasing until Armageddon, and this was based on the fact that the number of Bible Students drastically declined in the 1920s due to the 1925 failure and the defections of loyal Bible Students who disapproved of Rutherford's tactics and new teachings. But then unexpectedly there was a sudden increase in membership in 1931-1932, likely as a result of the Great Depression, and this did not fit with Rutherford's eschatological scenario which held that the number of the "remnant" would decrease until Armageddon. So to preserve this belief, Rutherford had to construe the increase as coming from a new group becoming associated with the Bible Students. To provide biblical justification, he reexamined the type of King Jehu in 2 Kings 10. He already identified himself and the "remnant" as the antitype of King Jehu, who stridently opposed idolatry and false worship in his time. On this basis, he identified the group of new converts as the antitype of Jehonadab, who was a non-Israelite that King Jehu met during his campaign against idolatry. Since Jehonadab was a non-Israelite, the new converts would similarly not belong to "spiritual Israel". This would allow the number of "spiritual Israel" to continue to decrease. Now, the earlier view in the 1920s was that Jehonadab prefigured the "millions now living who will never die" who would survive Armageddon and live on the New Earth, and thus would not be expected to preach, or even be Christians at all before Armageddon (i.e. the purpose of the Millennium is for them to learn of God and Christ). But Rutherford now drew especial attention to 2 Kings 10:15 which notes that Jehonadab climbed into Jehu's chariot. This was proof for Rutherford that the only non-Israelites (i.e. worldly people not affiliated with Jehovah's witnesses) who would survive Armageddon are those who "get into the chariot" to be saved. Those who refuse to do so would face the consequences, as expected through the Vindication doctrine. The new understanding was first published in 1932:
"Jehonadab represented or foreshadowed that class of people now on the earth during the time that the Jehu work is in progress who are of good will, are out of harmony with Satan’s organization, who take their stand on the side of righteousness, and are the ones whom the Lord will preserve during the time of Armageddon, take them through that trouble, and give them everlasting life on the earth" (Vindication, Vol. III, 1932, p. 77).
These ideas were refined in articles in 1933 and 1934, such that the large number of new converts began identifying themselves as Jonadabs. All of this already happened before 1935. What happened in that year was that Rutherford identified the Jonadabs (a group he had just created out of thin air to account for the new increases) with the "great multitude" in Revelation. Previously, this group was believed to be a "secondary spiritual class", i.e. the Jehovah's witnesses who were not as pure or firm in their integrity or character as the "elect" of the 144,000, but who would also have a heavenly destiny. Throughout the 1920s, the Memorial partakers would agree to partake if they were confident that they were in good moral character and repentent of their sins...those who did not feel they could not partake of the meal in good conscience refrained (as Paul advises in 1 Corinthians as well), and these were thought to include many of those in the secondary spiritual class. Now the "secondary spiritual class" was eliminated altogether and refraining from partaking of the Memorial was a sign that a person was a Jonadab, a non-Israelite. But there was still a small problem....Revelation refers to them as a "great multitude", yet there were still a minority among Jehovah's witnesses (tho merging the "secondary spiritual class" with the Jonadabs was a big boost). Rutherford thus claimed that there had to be a huge, massive preaching work to bring in the Jonadabs into a "great multitude". And so the preaching campaigns of the early 1930s that were concerned with vindicating Jehovah's name shifted into a new campaign of bringing new converts into the movement, which was carried on with intense urgency because Armageddon was believed to be only months away.
The Society today claims that 1935 was the magic year when the door to the heavenly calling closed, yet it pretty much closed several years before then thanks to Rutherford's "remnant" teaching and the fact that new converts were mostly de facto Jonadabs as early as 1932. The replacement of the unwashed masses (i.e. "millions now living") with the "great multitude" was thus facilitated by many complex factors, most especially the "Satan's Organization" doctrine (dating to 1924-1926), the "Remnant" doctrine (dating to 1928), the "Vindication" doctrine (dating especially to 1931), the unexpected increase in membership in 1931-1932, the "Jonadab" doctrine (dating to 1932), and lastly the new "Great Multitude" doctrine (dating to 1935). Then, on top of this, Rutherford in 1938 noted that the judgment and resurrection of the dead would not occur until after the Millennium, so the purpose of the Millennium is to allow for the "great multitude" to marry each other and have children to "fill the earth", to fulfill the Edenic command given to Adam and Eve. Rutherford based this notion on the type of Noah's Flood, in which there was a corresponding die-off of most of humanity and Noah's children repopulated the earth just as the antitypical "great multitude" would do. And since Armageddon was just months away, the members of the "great multitude" were strongly urged not to have children. All this was the subject of the 1940 book Children, but of course these novel ideas were reversed and rejected in the Knorr administration.
