What does the original letter look like? Does it have full color images? If not, then JPEG is the wrong format to be using, as it doesn't compress monochrome or greyscale images very well -- that's not what it was designed for.

From a size standpoint, the best savings will occur when you eliminate unneeded color information, i.e., use greyscale (256 colors per pixel, or one byte) or monochrome (2 colors per pixel, or 1/8th of a byte). A JPEG image is going to be 24 million colors per pixel (3 bytes per pixel). Monochrome results in really small files, but a scanned document may not hold up well when converted to monochrome.