In fact the case for including Pensions and Separation Allowances largely depends on exploiting the rather _arbitrary_ character of the criterion laid down in the pre-Armistice conditions.

Of all the losses caused by war some bear more heavily on individuals and some are more evenly distributed over the community as a whole; but by means of compensations granted by the Government many of the former are in fact converted into the latter.

The most logical criterion for a limited claim, falling short of the entire costs of the war, would have been in respect of enemy acts contrary to International engagements or the recognized practices of warfare.

But this also would have been very difficult to apply and unduly unfavorable to French interests as compared with Belgium (whose neutrality Germany had guaranteed) and Great Britain (the chief sufferer from illicit acts of submarines).
In any case the appeals to sentiment and fairness outlined above are hollow; for it makes no difference to the recipient of a separation allowance or a pension whether the State which pays them receives compensation on this or on another head, and a recovery by the State out of indemnity receipts is just as much in relief of the general taxpayer as a contribution towards the general costs of the war would have been.
But the main consideration is that it was too late to consider whether the pre-Armistice conditions were perfectly judicious and logical or to amend them; the only question at issue was whether these conditions were not in fact limited to such classes of direct damage to civilians and their property as are set forth in Paragraphs 1, 2, 3, 8, 9, and 10 of Annex I.If words have any meaning, or engagements any force, we had no more right to claim for those war expenses of the State, which arose out of Pensions and Separation Allowances, than for any other of the general costs of the war.

And who is prepared to argue in detail that we were entitled to demand the latter?
What had really happened was a compromise between the Prime Minister's pledge to the British electorate to claim the entire costs of the war and the pledge to the contrary which the Allies had given to Germany at the Armistice.