THE HISTORY OF H&R BLOCK: THE AMERICAN DREAM THAT BEGAN ON MAIN STREET NOW LIVES ON MAIN STREETS EVERYWHERE
FOR RELEASE JANUARY 12, 2000
KANSAS CITY - Main Street in Kansas City, Mo., stretches more than 70 blocks from riverfront to residential neighborhoods. On its 44th block sits a modest, but modern office building. You might not recognize it as the world headquarters of one of the most enduring and respected brand names in the country were it not for the two-foot brushed chrome letters on the front of the building that spell "H&R Block."
It is perhaps here that Henry W. Bloch, co-founder and chairman of the board, can best appreciate what he and his brother Richard accomplished. When they started their bookkeeping business, it was with one office - on Main Street even then, just a few blocks farther north - and little interest in doing taxes. Today, the company they built has transformed itself into America's financial partner, operating out of more than 9,000 tax offices and 94 Block Financial Centers in the United States, as well as more than 1,000 tax offices in Canada, Australia, and the United Kingdom, serving more than 18 million people worldwide. What happened in between is a success story marked by tenacity, persistence, and the promise of the American dream.
A bomber, a library, an idea
Henry and Richard Bloch were born and raised in Kansas City, the second and third sons of a prominent Kansas City lawyer. Henry graduated from the University of Michigan, while Richard graduated from the Wharton School of Finance at the University of Pennsylvania. (Older brother Leon studied law at the University of Missouri-Columbia.) During Henry's junior year, the Japanese bombed Pearl Harbor and he enlisted in the Air Force, which eventually sent him to Harvard Business School to study for a military career. While there, a chance visit to the library played a pivotal role in the birth of the brothers' business.
"I always wanted to do something different, something more than just a job, something to contribute to society," Henry recalls. "And my brothers and I were always thinking up different businesses we could start, but none of them felt right. Then one day, I saw a little pamphlet in the Harvard library that gave me the idea we were looking for."
The "little pamphlet" was a copy of a speech a Harvard professor had delivered to a group of insurance men. In it, he said there were three kinds of business: big business, small business, and labor. Big business and labor were both very powerful, but small business really had no one to turn to, he said, and small business was really the backbone of this country. The future, he declared, would be in helping small businesses.
Henry excitedly wrote his brothers about his vision of providing accounting, temporary workers, collection, management services, and more for small businesses. The full list included well over a hundred services - even income tax preparation.
Henry worked as a stockbroker briefly after he got out of the Air Force. Then, with a $5,000 loan from his aunt, the 24-year-old Henry rented a storeroom office for $50 a month and United Business Company was open. Working with his brother Leon, Henry landed a bookkeeping assignment for a hamburger stand eight blocks south of the rented Main Street office. More accounts followed and the business grew. After a while, however, Leon went back to law school, and Richard asked to become Henry's partner.
Luck favors the prepared - and the preparers
Business thrived and the company grew into bigger offices up and down Main Street. By 1954 (the beginning of the same basic tax code the United States still uses), United Business Company had 12 employees keeping books for various clients. Henry and Richard were working seven days a week, long into each night. Something had to give.
"We had been doing taxes for a guy named John White who worked in display advertising at The Kansas City Star," Henry recalls. "We told him we couldn't keep doing his taxes because we were too busy with our other work. But he suggested, 'Why don't you really try making a business out of taxes before you get out entirely?'"
So John White went back to The Star and had a small ad made up that showed a man behind an eight ball, with a simple headline: "Taxes, $5." He convinced the Blochs to run the ad twice. The day the first ad ran, Henry was out visiting customers when he got a message to call his office. Richard answered breathlessly.
"Hank, get back here as quick as you can," he said. "We've got an office full of people!"
Later Henry learned just how well timed their ad was. Until the mid-'50s, the Internal Revenue Service had actually filled out tax returns at no charge for anyone who went to their local IRS office. Errors were common, however, and when people complained, the IRS began eliminating the service. The Blochs' first ad appeared at the same time that Kansas Citians were discovering the IRS would no longer do their tax returns.
H&R Block is born
On Jan. 25, 1955, Henry and Richard Bloch replaced United Business Company with a new firm that specialized exclusively in income tax return preparation: H&R Block, Inc. Within weeks, the company grossed nearly a third of the annual volume United Business Company had taken years to develop. The IRS was about to stop filling out taxpayers' forms in New York, too, so H&R Block opened seven offices there in 1956.
A year later, H&R Block began opening franchise offices, and H&R Block doors swung open on Main Streets all across the country. The company went public on Feb. 13, 1962 with a $300,000 offering - 75,000 shares at $4 per share. H&R Block became listed on the New York Stock Exchange in 1969. Two years later, having survived lung cancer, Richard decided to retire and devote his time to supporting cancer research and education.
By 1978, H&R Block offices prepared more than one out of every nine tax returns filed in the United States. In 1986, in conjunction with the IRS and Sears, H&R Block filed 22,000 returns electronically from two sites. The test was a success: Electronic filing significantly reduced the amount of time required for a taxpayer to receive a refund. More than a decade later, H&R Block's trademarked "Rapid Refund" service has become synonymous with electronic filing. Now, the company files nearly half of the total number of returns filed electronically with the IRS.
Although H&R Block is the largest tax-preparation company in the United States, its consumers today want more from their local H&R Block office than tax preparation. They already think of H&R Block as a financial services company, and they've literally asked America's most trusted tax partner to become their personal finance partner. To meet their needs, H&R Block has transformed itself from a company focused exclusively on tax preparation to a company that provides comprehensive financial services.
It's a strategy that's reminiscent of the early days of H&R Block. Once there were few affordable options for the average person's tax preparation needs. Henry and Richard filled the gap. Today mainstream Americans are looking for an affordable - and approachable - partner to help them with the rest of their financial needs. And the "New" H&R Block will meet their needs. |
