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This is one of those "rules" that's currently in rather a state of flux, with several of the most prominent style guides disagreeing. The "old" rule, stated in the Holt Guide to English was basically that if the syllable was pronounced then 's would be used (Lewis's) and if the syllable wasn't pronounced then the s was dropped (James'). AP style now tends to eschew that, whereas the Chicago Manual still sticks with it, and Fowler seems to be sitting on the fence, pointing out that it is more usual now to use "Jones's", with more than one Jones remaining as "Joneses".
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