Abstract: A coolant pump supplies coolant flow to a part to be machined on a machine tool, and to a cutting tool holding device. In one embodiment the tool holder is part of a self compensating tool holding device which allows the cutting tool to float in position until the coolant supply forces a piston against a collet which grasp the tool holder in a fixed position. In a second embodiment, the tool holder is part of a device to cause linear motion of the cutting tool by using the coolant flow to force the piston shaped tool holder, and cutting tool thereon, through a cylindrical bore in a main body, and extend outward from the main body. In yet another embodiment, the tool holder is mounted to a hydraulic motor which uses the coolant flow to rotate the tool holder and cutting tool thereon.