Brewer's: Peg too Low

(A). Low-spirited, moody. Our Saxon ancestors were accustomed to use peg-tankards, or tankards with a peg inserted at equal intervals, that when two or more drank from the same bowl, no one might exceed his fair proportion. We are told that St. Dunstan introduced the fashion to prevent brawling.

I am a peg too low
means, I want another draught to cheer me up. 
Come, old fellow, drink down to your peg! But do not drink any farther, I beg.

Longfellow: Golden Legend, iv.

To take one down a peg.
To take the conceit out of a braggart or pretentious person. The allusion here is not to pegtankards, but to a ship's colours, which used to be raised and lowered by pegs; the higher the colours are raised the greater the honour, and to take them down a peg would be to award less honour. 
Trepanned your party with intrigue, And took your grandees down a peg.

Butler: Hudibras, ii. 2.

There are always more round pegs than round holes. Always more candidates for office than places to dispose of.

Source: Dictionary of Phrase and Fable, E. Cobham Brewer, 1894
Pegasos
Peg
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