If the Northern Line were extended to Clapham Junction, it would not be used by people whose destination is Waterloo but it would be used by those travelling to Bank, Moorgate, Old Street etc.

Let's now turn your argument on its head. Why would anyone working near the Bank Of England who travels via Clapham Junction prefer to stay on their train to Waterloo (or Victoria) knowing full well that they will have to fight even to gain access to the Underground platforms and then be crushed like sardines in an overcrowded train and have to make an extra train change when the alternative is to change at Clapham Junction into a train that is not yet crowded and which may well have unfilled seats?