He who sups with the devil must use a long spoon - and bring a good agent

Should reputable scholars write 'authorised' company histories? Niall Ferguson can think of two good reasons for doing so ... and money is only one of them

To many professional historians, the word "authorised" is synonymous with "censored", not to mention "whitewashed". When I agreed, nearly five years ago, to write a history of the Rothschild bank authorised by N. M. Rothschild & Sons, more than a few of my colleagues raised their eyebrows. I was soon on the receiving end of a selection of chilling horror stories, the common moral of which was that such commissions were Faustian pacts - with one's academic integrity rather than one's soul as the price.

Yet there can be little doubt that more and more historians will be asked to write authorised or official histories in the future, and particularly company histories or business biographies. Whereas a decade or two ago, the majority of companies regarded their histories with indifference, embarrassment or paranoid secretiveness, today more and more are coming to appreciate that their past is an asset.

The company histories that used to be produced were barely histories at all: more like leather-bound brochures, usually written by an insider in an anaemic style. I speak as a poor sufferer who, as a doctoral student, read scores of such books trying vainly to find out what Hamburg firms had done during the years of German hyperinflation. Nearly all of them had an exceedingly short chapter titled "Difficult years, 1914-45", containing a sentence along the following lines: "In 1923 the German currency collapsed.Only with difficulty could the directors steer the company through the stormy economic seas of the inflation era."

Happily, a few trail-blazing firms realised the pointlessness of such books and commissioned serious scholars to write their histories. I think, for example, of F. C. Gerretson's four-volume History of Royal Dutch, published in the 1950s, or more recently the admirable history of Schroders written by Richard Roberts, which actually tried to understand the bank's business (as opposed to its partners' social lives). Here were serious books that enhanced not only their authors' reputations but also the reputations of the companies that commissioned them.

So when Lord Weidenfeld phoned me up one dank day in Michaelmas term 1993 to ask if I would be interested in writing a history of Rothschilds, I did not rule the idea out. Compared with the other project I was then toying with, there were two attractions. One was (let's not be coy) a decent advance. The other was that the Rothschild archive had never before been made fully accessible for research; and I knew enough to be sure that it contained virgin source material of the very highest quality.

But was there a catch? This is the question any historian should ask when faced with such a tempting offer; for, as others have found to their cost, there can be a big one. I know of at least two histories, commissioned by firms and written by serious scholars, that never saw the light of day because the management got cold feet when the manuscripts were delivered. Whether too academic or too near the bone, these manuscripts vanished into the firm archive (or worse, were then used as the basis for sanitised histories by other writers). Having been paid, the original authors found that they had no legal right to insist on publication.

The other big catch is a more subtle censorship. Key files are not made available. Or, as the price of publication, the author is asked to omit certain embarrassing details.

Even when such things do not happen, authorised historians are quite likely to be accused by suspicious reviewers of having submitted to such pressures. I can think of two eminent historians whose histories of major German companies were denounced for allegedly sanitising the firms' role in the Third Reich.

In reality, it has been precisely the pressure to come clean about the past of German firms that has progressively raised the standard of German business history. Nevertheless, historians who venture into this territory need to be aware of the risks they run. The stakes, after all, are high when historical evidence can form the basis of multi-million pound lawsuits by victims of Nazi policy.

Needless to say, this was not one of the risks I had to run, since the Rothschilds were themselves victims of the Nazis (two members of the family murdered, all the others living on the continent imprisoned or driven into exile, and assets worth millions stolen). Yet I had to be sure that I could write an uncensored history that would be published. How to achieve this?

Tip number one is to put the negotiations in the hands of a professional. I was fortunate to find a first-class agent in Gill Coleridge, who handled what proved to be very protracted talks with both bank and publishers. In the contract she helped to draft, it was agreed that I would be entitled to quote freely from any material in the Rothschild Archive in London predating March 1915; and, of course, from any other archives and private collections of papers as far as their curators gave me permission to do so.It was also agreed that the bank would have the right to comment on the manuscript and that I would "make every effort to take account of and respect" those comments.

The only part of the book whose form, content and scope the bank retained the right to approve was that part that could not be based on archival sources - the last chapter and the epilogue, dealing with the years 1916 to the present. Even for a book beginning in the 18th century, 1915 was a relatively early cut-off point; but it suited me. I was mainly interested in the period before the first world war when the Rothschilds had been the biggest bank in the world.

This arrangement worked far better in practice than I could ever have hoped. Throughout, I was able to abide by the Rankean principle of trying to write history as far as possible "as it actually was". This, however, had more to do with the Rothschilds' fundamental commitment to historical accuracy than to anything written in the contract. And this brings me to the crux of the matter.

When writing about the past of a still-existing entity, the historian is necessarily dependent on the present generation's readiness to know - and make public - the truth. I was fortunate in that all concerned were seriously interested in having an accurate account of their antecedents' lives. When individual family members read parts of the book their response was invariably to correct errors and to provide material I had missed. The moment I always dreaded - when someone would ask me to excise an uncomfortable truth - never came.

I suspect there is no way of ensuring such sustained cooperation. But there may be ways of encouraging it. One tactic I adopted, for example, was to circulate draft chapters as I wrote them. This had the disadvantage that all the rough edges and errors that characterise first drafts were exposed, but the advantage was that those concerned became familiar with my approach and could see the project evolving gradually. Disappearing for four years and then delivering a huge manuscript would have been a mistake.

Even with a good contract and goodwill, however, it was a risk, and I lay awake many a night imagining that it would all somehow go wrong.

Still, the prize - access to the Rothschild archives - was worth the sleepless nights. It was hugely exciting, for example, to see the long-lost archive of the Vienna bank, confiscated by the Nazis in 1938, seized by the Red Army at the end of the war and buried for 45 years in the KGB "trophy" archive in Moscow. I shall never forget opening the silver box containing the private accounts of Prince Metternich, the Austrian statesman, or finding the original of the extraordinary letter he wrote to Salomon Rothschild in 1848 as he fled into exile.

And the treasures held in the archive of the London house were even more dazzling. In particular, the so-called "private letters" between the partners in the bank, which cover the years from 1812 to 1898 and fill 135 boxes, must rank among the most important source materials for 19th-century European history. Extraordinarily well-informed about politics and finance, these letters are also wonderfully candid, especially those written by Mayer Amschel Rothschild's five sons in an almost unreadable Judendeutsch (German in Hebrew characters).

Being an authorised author is certainly more difficult than joining the queues in the Public Record Office. But the benefits of access to previously unavailable sources are immense; and the costs of gaining that access need not be too high.

Niall Ferguson's The World's Banker: The History of N. M. Rothschild & Sons is published by Weidenfeld and Nicolson, price Pounds 30.00.