James was a profligate spender of royal revenue and his Chief Minister Robert Cecil knew that any change would take time. The financial position of the Crown had been eroded by over 50 years of inflation. But one area targeted by Cecil was an area all but untouched by Elizabeth and Lord Burghley (Cecil’s father). This involved the revenue raised via Crown lands and Custom and feudal rights. The Book of Rates which set down the value of commodities that attracted duties had not been changed since the reign of Mary Tudor. A new book was issued in 1604.
In the same year, a decision was taken to lease out the administration of Custom dues in return for an annual rent. Therefore, Cecil could anticipate a certain amount of capital flowing into the royal coffers each year. This farming out of Custom dues attracted a large number of very wealthy men who clearly felt that they could make a great deal of money from them. A group associated with Cecil won the contract and they took out a seven year lease (1604 to 1611) paying an annual rent of £112,400. The value of Custom dues in the final years of Elizabeth had been about £100,000 a year, so this represented a decent increase for the Crown.
£112,400 was a massive sum of money for the time but the end of war with Spain presented far more opportunities to export goods and thus increase the revenue that could be made from these Custom dues. The money made was so great that in 1607, the men that won the contract agreed to increase their annual payment to £120,000. In 1611, the lease was extended for £136,000. In 1614 when another seven-year lease was issued, the rent was fixed at £140,000 a year. In just ten years, the value of the Custom duties had risen by £28,000 a year. However, the men who leased out these Customs duties must have been confident of making a large profit – hence their desire to pay such a large annual amount. Lionel Cranfield, Lord Treasurer from 1621 to 1624, estimated that the clear profit for the 1604 to 1611 lease had been £200,000, averaging £28,500 a year.
While ultimately the Crown lost out in financial terms by Custom farms, it was a system that suited both parties involved. The Crown got large sums of money that it desperately needed while the syndicate that won the contract had every incentive to work hard to accrue as much from the contract as was possible.