Back in January 1937, few shrewd investors would have wasted a second look at bonds of the tiny Philippine Railway Co., sick sugar-hauling road on the islands of Panay and Cebu. Selling around $11, the $8,549,000 issue was about to mature, apparently a total loss to U. S. bondholders. Then came rumors that Washington might act, that the Philippine Commonwealth would redeem the issue at $65. Bonds shot up to $31 in January and February as speculators bought for the rise, crashed when President Manuel Quezon denied his Government was buying them. Smelling a rigger, SEC investigated, found the flurry had cost speculators about $1,000,000.
Convicted last week in Manhattan Federal Court for their part in this fruitless flurry were suave William P. Buckner Jr., 32 (bibulous distant relative of sermonizing New York Life Insurance Co. Chairman Thomas A. Buckner), and his associate William J. Gillespie, 37. Unlike most U. S. Government prosecutions, handsome Bondster Buckner's trial produced a flashy array of Government witnesses: Cinemactors Frank Morgan and Herbert Brough Marshall, Everett Crosby, brother and manager of Crooner Bing (none of whom yielded to Buckner's urgings to get rich quick in the Philippine bonds), Doris ("Peewee") Donaldson and two other Broadway cuties.
Absent from the fortnight trial was Massachusetts' Senator David Ignatius Walsh, who introduced a bill to help the bond redemption by Congress legislation. To lobby for the bill "Peewee" and her pals were flown to Washington for champagne parties. Said Buckner, "It never occurred to me that I had to become a monk. . . ." But for throwing away $12,500 of bondholders' funds on the parties, as chairman of bondholders' protective committee, as well as the bond rigging, Bondster Buckner and his friend Gillespie were convicted of mail fraud and conspiracy, may have to spend 37 years in jail.
One of the saddest men in the court room was little Felipe Abreu ("Goodfellow Philip") Buencamino, 53, whip of the Philippine Assembly, longtime confidant of President Quezon. Because he offered to cooperate in the bond redemption plan for an alleged $50,000, he was denounced by the Federal prosecutor as the "Judas of the Philippine Assembly." Leaving last December to face the SEC inquiry, he told loyal followers: "I wish to break a little confidence which the Chief Executive (Quezon) has told me. ... He said he . . . did not believe me guilty of the accusations laid at my door." Last week he was convicted of a part in the conspiracy, may be sentenced to two years in jail.