The rule for academic manuscripts (in which letters are often quoted) is to single-space and indent the letter. This is probably the easiest way to handle this when preparing a novel manuscript--as others have said, it'll wind up being set in type according to the publisher's house style.
Thus:
In the base of the old clock, Jerome found a tattered piece of parchment, marked by ancient creases and the prints of
centuries of hands. He waited to unfold it until he was upstairs in his bedroom and had locked the door safely behind
him. He read in amazement--
To Her Most Gracious Highness Elizabeth, Queen of England;
Fair sovereign! Your humble servant Hugh Lord Windemere requests
the honor of an audience at your Highness's convenience. You may entrust
any correspondence to the messenger who bears this.
In haste, yours obediently,
Windemere
Jerome ran his thumb cautiously over the red wax seal that still hung, jaggedly torn by an impatient paper-knife,
from the bottom of the parchment sheet.