Main Street in Kansas City, Mo., stretches more than 70 blocks, from the riverfront through residential neighborhoods. On its 13th block sits a 17-story office building. Its familiar green glass welcomes visitors and employees to H&R Block's World Headquarters.
It is here, perhaps, where co-founder Henry W. Bloch 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 the world’s largest tax services company serving 24 million clients at more than 13,000 retail locations and through digital tax solutions. What happened in between is a success story marked by tenacity, persistence and the promise of the American dream.
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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 (their 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 Army Air Corps, 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 business.
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 opened United Business Company.
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. Eventually, Leon returned to
law school, and Richard became Henry's partner.
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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.
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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 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 a 1986 test with the IRS, 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.
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H&R Block Today
In 1998, H&R Block began building a distribution channel under the RSM McGladrey brand to deliver tax, accounting and business consulting services to privately held, mid-sized companies, along with wealth management services for the business owners.
In September 2000, Henry retired as chairman and assumed the title of chairman emeritus, the honorary position he continues to hold.
In 2006, the company opened the H&R Block Bank, a federal savings bank and member FDIC. During the 2007 tax season, the Bank launched the H&R Block Emerald Prepaid MasterCard as a way to help many of its tax clients begin to use traditional financial services products. The Bank opened more than 2 million prepaid debit card accounts in its first year.
Mainstream Americans continue to look to H&R Block as an affordable - and approachable - tax partner. Henry and Richard Bloch founded the company on a culture of providing superior customer service and on a pledge to stand behind their work. Today, the company remains committed to these tenants and to serving clients in
the manner in which they prefer - in a retail office, using digital tax solutions or both.
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