"It never helps historians to say too much about their working methods. For just as the conjuror’s magic disappears if the audience knows how the trick is done, so the credibility of scholars can be sharply diminished if readers learn everything about how exactly their books came to be written." But he gives a description of his method anyway:
"When I go to libraries or archives, I make notes in a continuous form on sheets of paper, entering the page number and abbreviated title of the source opposite each excerpted passage. When I get home, I copy the bibliographical details of the works I have consulted into an alphabeticised index book, so that I can cite them in my footnotes. I then cut up each sheet with a pair of scissors. The resulting fragments are of varying size, depending on the length of the passage transcribed. These sliced-up pieces of paper pile up on the floor. Periodically, I file them away in old envelopes, devoting a separate envelope to each topic. Along with them go newspaper cuttings, lists of relevant books and articles yet to be read, and notes on anything else which might be helpful when it comes to thinking about the topic more analytically. If the notes on a particular topic are especially voluminous, I put them in a box file or a cardboard container or a drawer in a desk. I also keep an index of the topics on which I have an envelope or a file. The envelopes run into thousands."
The old "envelope" filing system ... not the most efficient, as far as I am concerned.
For more "enlightenment" on the methods of some historians, see Thomas' Diary.