The rule in scholastic history texts is James's (the only exception being people of extreme name recognition like Moses'). My professor at BYU insisted that we followed this rule, and I still follow it today. Bryan Garner (legal writing legend) also follows this rule.

But I seem to see more in every day use James' (which my wife, who is a Middle School English teacher and who is a phenomenon with English grammar, and has certificates that say so, says this is the correct form for papers written in her class).