I have a pretty strong memory that it was in the drops, but I can't remember where I read that. I have 3 old bike books (Glenn, Delong, Custom Bicycle), and they provide 3 different methods.
There were a lot of rules of thumb, though all of them have problems. Flexibility, torso length, arm length, forearm/upper arm length, conditioning, habit, handlebar dimensions - all those and more can impact a rider's best handlebar location.