By Josiah Stegner – Henry and Thomas Bloch delivered the Distinguished Executive Lecture in Business and Leadership April 19th at William Jewell College. The lecture was titled “Many Happy Returns: Tom Bloch Interviews Henry Bloch,” and was based on Tom Bloch’s recent biographical book, Many Happy Returns: the Story of Henry Bloch, America’s Tax Man.
Henry Bloch was born in 1922 and was first inspired to do something to help humanity in his life by watching, “The Life of Louis Pasteur,” at age thirteen. He admitted that he was a “very average student who worked very hard to be average,” and that his two brothers Richard and Leon didn’t have to work nearly as hard. Mr. Bloch graduated from Southwest high school in Kansas City, and attended the future University of Missouri- Kansas City his freshman year. A great-aunt offered to pay his way at the University of Michigan so he transferred to Ann Arbor. During his junior year there, while in a bridge tournament, he heard the news about Pearl Harbor and enlisted in the Army Air Force.
During the war, he flew 31 successful missions in a B-17 bomber as a navigator. The odds of being shot down or killed for crews who flew over 30 missions was 70%. Henry and his unit were eventually honored by a Presidential citation for heroism. After the war, the Air Force sent him to Harvard to study statistics control. However, this was not his passion. His mother had always wanted the three brothers to work together, and they had constantly corresponded through letters during the war to refine ideas.
While at Harvard, Henry read a booklet by Dr. Sumner Schlichter on business economics. The booklet acknowledged that labor and big business were powerful but that the small business sector was booming and offered enormous potential for companies who could help small businesses with their everyday needs. He and his brother, Leon, decided to start a business offering 50 services to other small businesses, including window decorating, tax returns, bookkeeping and more. He asked the same great-aunt who had sent him to college for a loan of $50,000 to start the business. Although she turned down his request, she did agree to loan him $5,000 as long as father would cosign. Henry considers it one of the best things that could have happened, for his business was to struggle for quite some time and it was unlikely he could have repaid the loan. After eight years with little success, Leon decided to go back to law school.
During this difficult period, Henry often worked for free just to get the references. He admits he would have quit but really didn’t have any other options or marketable abilities. Instead of quitting, he refined his services from 50 down to 6 and later down to just one: bookkeeping. His first real customer was a hamburger stand at 39th and Main in Kansas City.
Eventually, Henry’s mother suggested hiring his other brother, Dick, who was married and had children. To supplement their bookkeeping income, they often prepared tax returns for $5, advertised solely by word of mouth. By January 1955, H&R Block (then United Business) had their offices packed with people who were looking for someone to prepare their taxes. In fact, the tax preparation business was starting to interfere with their bookkeeping obligations so the brothers started turning away everyone who wasn’t one of their bookkeeping clients.
One of the customers they attempted to turn away was a reporter from the Kansas City Star, John White. He suggested converting their bookkeeping business to a tax return business and even went so far as creating a couple of ads for them to run in the Star. Reluctantly, Henry and Dick agreed to give the ads a try and the response was overwhelming.
Their decision to switch fields coincided with the emergence of the W-2 form and led to an explosion of growth in the tax return preparation business. H&R Block had a virtual monopoly because their focus was on the customer and their five-dollar price was so low that it acted as an entry barrier to other companies considering the business. In fact, it was 12 years before prices were raised and, during that time, their only competition was the IRS, who filled out forms for free.
H&R Block was also one of the first franchises in America, selling the first franchise about the same time as McDonald’s. They also started an extremely successful ad campaign, “17 reasons to go to H&R Block,” that ran for over a decade. Today H&R Block is a worldwide company with over 13,000 offices and has prepared over half a billion tax returns.
After the lecture, Henry Bloch offered some life-tips to the William Jewell College students in the audience. “Follow your heart for your career, and do something you really enjoy.” When asked what field might interest him if he were starting a business today, he replied that he would like to see “a cell phone that actually works.”