How was the year 1925 chosen as a dividing point in the history of economic thought? The JEL codes divide &quot;History of Economic Thought&quot; into &quot;through 1925&quot; and &quot;since 1925&quot;.
What is the significance of the year 1925 in the history of economic thought? Or was this just some cutoff point that was quite arbitrarily chosen?
tl;dr:
It is most likely an arbitrary date because they had to set some year. In fact the year 1925 is not even a strict guideline but only loose criterion. As such the year was not set due to some special significance.
The JEL classification also responds not just to the needs of academicians but also grant agencies, government, university HR departments etc. and so classifications might be arbitrarily set in ways that do not necessary always correspond to what economists believe. However, there are some subtle hints it could have something to do with the advent of Neoclassical Economics.
Full Answer:
The JEL codes are set by American Economic Association (AEA) as they were originally developed for their Journal of Economic Literature. As such AEA is really the only authoritative source on this issue.
Normally classification codes come with guidelines but in this case JEL guidelines for &quot;History of Economic Thought through 1925&quot; just read:

B1 History of Economic Thought through 1925:
Guideline: Not Specified.
Keywords: Economic Thought.

However, B1 is just general category that is further subdivided into smaller sub-categories B10-B19. When you look at each of the B10-B19 guidelines individually most of them include the following caveat:

Caveats: The demarcation year of 1925 is used as a loose criterion.

When we look at the classification guidelines for History of Economic Thought since 1925&quot; we find the following guidelines:

B2 History of Economic Thought since 1925:
Guideline: Studies that are also relevant to contemporary economics or
economies should be cross-classified here and under the other
appropriate categories.
Keywords: Economic Thought, Neo Classical.

Again quite vague but the keyword 'Neo Classical', is suggestive and suspiciously inserted there especially since neoclassical economics (although technically possible to trace prior to 1900s) first gained on prominence in early 1900s (see the History of Economic Thought by Brue and Grant). Although this is really not enough to be certain.
Also as in the previous case B2 is split into multiple sub-categories ranging from B20-B29 and most of them again include the following caveat:

Caveats: The demarcation year of 1925 is used as a loose criterion.

Furthermore, there is actually paper published by JEL about history of it's classification system and how it developed to it's present form. According to Classifying Economics: A History of the JEL Codes by Beatrice Cherrier (2017):

... Yet the AEA classification
does not provide a pure image of the discipline. Instead, it is a compromise between
looking forward and looking backward,
between AEA officials’ sometimes conflicting visions of their science and the multiple
and contradictory demands they face: editors
needed a way to select reviewers and referees; recruitment committees needed a way
to classify job candidates and their output;
the government wanted a system to draft
economists into the war effort, and later to
recruit specialists into the various bureaus
concerned with monitoring and managing
economic affairs; librarians needed help in
indexing papers and books; and the National
Science Foundation (NSF) needed a classification to quantify and evaluate national
scientific expertise ...

Author further states:

JEL codes reflected changes in
the ways theory and applied work interacted.
Second, the codes point to the transformation of the subject matters of the discipline
and the rise and fall of different approaches
to economics. Third, they reflect changes in
the external pressures on the discipline and
information technology

Furthermore, as the article explains the classification codes undergo 4 revisions and were originally set up 1911. Consequently, the year 1925 was not originally even part of classification and might very well change in the future.
The article also tells a fascinating story of how these classifications came to be and most of them were results of compromise between various stakeholders and economists holding different opinions on how to classify economics thinking. It is a result of a messy process rather than some unanimous academic consensus.
Lastly, I actually written an email to AEA requesting clarification. They confirmed that the year 1925 is not strict criterion and the person I corresponded with simply stated they do not know how the criterion was set. I am not publishing the e-mail as I don't know what would legal ramifications of such act be, and my e-mail address contains my real name, but I expect that anyone making the same inquiry would receive the same answer.
So what can we conclude from the above?

I think the evidence above points clearly to the fact that 1925 is just a loose guideline. The year itself has no special significance.
The keyword Neo Classical for B2 category is suggestive that development of Neoclassical economics could have something to do with it as it occurred around the period set by the 'loose criterion'.
The classification has to be set not only for needs of economists but also bureaucratic needs more widely and as such it might not always reflect purely academic opinions.
AEA employees (or at least one of them) themselves do not know why 1925 was chosen. Given that the most recent revision of JEL codes is over three decades old it is possible that such knowledge is lost to us.