One thorny issue, which if not constitutional, nevertheless existed for many years, concerned a club's territory. In order to safeguard clubs from poaching, it was agreed that there should be 'territorial limits' for each club. Thus, for example, all Manchester Rotarians had to have offices or live within the boundaries of the city, and no other club could take members from within those geographical limits. This did not matter in the early days of Rotary when clubs were few and far between. However, as Rotary grew, it became a problem. In the USA particularly, there were and still are some city center clubs who were unwilling to cede territory in the past and had therefore become very large. For many years the Chicago Number One and New York clubs were in this position.

From early in its history, Rotary had formed an 'Extension Committee' dedicated to enlarging the movement but its prime purpose was to develop new countries and new cities. In 1919, the board was authorized to establish special rules and regulations to cover extension. It was already one of the Articles of the Association-number 2 section 1- "to encourage, promote and supervise the organization of Rotary Clubs in all commercial centers throughout the world." A list submitted to the 1921 Convention (page 201) clearly indicates the lines on which the committee was thinking, with extension planned for cities such as Bordeaux, Antwerp, Marseilles and Amsterdam, all-important 'commercial centers'. In a long and diverse discussion at Edinburgh, there was no mention of the creation of extra city clubs.

The single member classification rule had already led to the creation of 'rival' organizations such as Sertoma, (QV) founded by a Kansas City physician who was unable to join Rotary because his classification was already filled. Nevertheless, most big city clubs were unwilling to cede territory to allow extra clubs to absorb potential members in categories already filled, and there appears to have been little guidance from the top at this time to suggest that they should. In fact, Rotarians frequently recommended work colleagues to other organizations such as Kiwanis, Lions and Sertoma when their own classification in Rotary was already taken. The introduction of the 'Second Active Member' was but a small step towards alleviating the position.

It was probably in Britain that the matter of extension by allowing the ceding of urban territory to new clubs was first raised. In the early part of the 1920s, the British magazine 'Rotary' had been carrying regular letters attacking the single classification system which was considered restrictive. In one issue, W. H. Alexander, Past President of the BARC in 1915, wrote "the remedy is to be found...in additional clubs in our large centers of population as is being done in London at the present time." He was referring to the decision of the London Club, inspired by Arthur Chadwick, PRIBI 1928, and Ted Unwin, that "the time had arrived when by delimitation of its own area, it should be made possible for other clubs to be formed in the Metropolis." The London Club Council made this decision in 1921 and the relevant geographical area defined in 1923. This re-alignment of its area was ratified at the St Louis Convention the same year.

The following year, 1924, the first extra London club to be formed was started in Streatham, and several others were opened within a few months, among them St Pancras, Upper Norwood and Chiswick, so that by January 1, 1925, there were nearly a dozen clubs in the former London territorial area. A few years later, in 1934, Paul Harris was pleased to visit the Streatham Club accompanied by Ted Unwin, the occasion on which there was a discussion of the Rawlings questionnaire (QV).