In Middle English, both the possessive singular and the common plural forms were regularly spelled es, and when the e was dropped in pronunciation and from the written word, the habit grew up of writing an apostrophe in place of the lost e in the possessive singular to distinguish it from the plural. Later the apostrophe, which had come to be looked upon as the sign of the possessive, was carried over into the plural, but was written after the s to differentiate that form from the possessive singular. By a process of popular interpretation, the 's was supposed to be a contraction for his, and in some cases the his was actually "restored." [Samuel C. Earle, et al, "Sentences and their Elements," New York: Macmillan, 1911]
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