For sale: was 20p, now pounds 27.50: They may look old and dog-eared in a jumble sale, but there is money to be made from second-hand books, says John Windsor

In Farringdon Road, Clerkenwell, north London, at 9am every Saturday, the literary pursuit turns into a scrum. Stallholder George Jeffery brings out his rummage box of 25p battered books and steps aside as the trade's lesser cognoscenti descend on its treasures.

These bookshop owners and collector-dealers are no feeble bookworms. In a single move, the toughest of the pack can touch down an armful of grubby Penguins on the neutral ground of the pavement, sneer at an interloper, then chase off a prying photographer. Are these the guardians of the secret of turning pulp into gold? Or players in a weekly enactment of the pathology of collecting? Whichever it is, they prefer to keep mum about it.

For a commentary on the bottom division of the book market I consulted instead Martin Bates, a 43-year-old bank employee from Forest Gate, east London. He discovered how to turn pennies into pounds through book trading only 18 months ago. He browses bookstalls, junk shops and boot sales - and knows where to get the latest tips on market values.

'The find that got me started,' he says, 'was a First World War company roll of honour which I bought for 20p in a junk shop. It listed the company's fallen by department - the storemen, the managers. I knew it had to have a value, but I hung on to it for three months, not knowing what to do with it.'

Then he stumbled across the bible of downmarket book collectors, the monthly Book and Magazine Collector. Now in its eighth year, the magazine lists secondhand book values from pounds 1 upwards based on transactions in the trade. Within days, Mr Bates had sold his roll of honour for pounds 25 to a private collector advertising in the magazine. He told Mr Bates it might be the only surviving copy.

Mr Bates blued another 20p on a 1969 Dr Who annual which he spotted at a boot sale in Chigwell, Essex. By that time he had combed the magazine's 'Wanted' and 'Sale' pages, absorbing prices. He despatched the annual, in good condition apart from a few lines of childish scribble, for pounds 9 to a dealer who later offered it in the magazine for pounds 27.50.

Other finds made money. Memorials of the Great War, bought for 50p, sold for pounds 5. A first-edition Wooster's World of 1968, with dust jacket in poor condition, cost Mr Bates 25p and sold for pounds 12. He has put his grand total of pounds 60 earnings in trust for his nine-month-old son.

'Even though you're laying out only a few pennies, there's a satisfying feeling of consumption,' he says. And in selling, even though you are making only a few pounds, there is the feeling that you have made a killing. 'The books you buy should never cost more than pennies and you should never buy unless you know that there is a market for them.'

For others more badly bitten by the book bug, the outer reaches of obsessiveness beckon - careering round north London with an A-Z trying to 'gut' a dozen or so small sales a day, conning vicars with a donation of worthless paperbacks in order to get into the jumble sale first, using tissue paper to rub out prices on fly leaves, then scoring in bigger prices.

However avid the book hunters, the market falls far short of 'perfect' in the economists' sense. Collectors' tastes are idiosyncratic, and with literally millions of books to choose from, the impression is of lots of tiny 'I-buy-who-I-like' markets for different minor authors. For example, everybody knows that first editions by Graham Greene, P G Wodehouse and even the Amises, father and son, are part of the same market for big-name modern first editions. But who would have guessed that there are collectors' markets for Mary Norton, author of Bedknob and Broomstick, Gavin Maxwell (Ring of Bright Water) and Lucy M Boston, author of the Green Knowe children's books?

Condition is all-important, of course. A book worth pounds 200 in mint condition would be worth only pounds 10 in poor condition. Books worth less than pounds 12 in mint condition are virtually worthless in poor condition. So are modern first editions lacking dust covers. In very good to fine condition (next to top-condition mint) with dust jacket, Mary Norton's first book, The Magic Bed-Knob (1943), is worth an author's top price of pounds 40- pounds 50. In the same condition, Ring of Bright Water (1960) has fetched an author's top price of pounds 15- pounds 20 and Lucy M Boston's The Children of Green Knowe (1954) a top pounds 30- pounds 40. None of these prices is high enough to retire on - but enough to tempt 20p from your pocket if you happen to see a copy in good condition at a jumble sale.

You have to know the inside story when wading through a morass of paperbacks. The Penguin edition of the cartoonist Sine's Massacre (1966) is worth up to pounds 20 in very good condition - all because Sir Allen Lane, Penguin's founder, stung by his board's decision to publish the book against his wishes, loaded a van with all the copies he could find and made a bonfire of them.

Book and Magazine Collector, 43 St Mary's Road, London W5 5RQ, pounds 1.95. Modern First Editions (annual), ed. Michael Cole, available only from The Clique, Freepost YO418, York YO1 1UU, pounds 22 (inc p & p). Book Auction Records (annual), Subscription Division, Dawson UK, Cannon House, Folkestone, Kent CT19 5EE, pounds 92.50 (inc p & p).

(Photograph omitted)