Madinah was an international centre. The Jews were very influential in trade and economy, and were money lenders charging enormous interest in their financial dealings. Moreover, being the 'People of the Book' (Ahle-Kitab), they were well versed in literature and learning.
According to their beliefs, the Jews were confident that the 'promised prophet', Rasulullah would support them in their lost prestige. At first they were inclined to look with some favour on the teachings of Rasulullah .In their view he could not, of course, become their promised 'Messiah'. Rasulullah might become their avenger, help them in conquering the Arabs and find for them the new kingdom of Judah. With this aim in view, they had joined the Madinities in a half-hearted welcome to Rasulullah for a time they maintained a peaceful attitude. But it was only for a time, for barely a month had gone by before the old spirit of rebellion, which had led them to attempt to crucify their prophet found vent in open uproar and secret treachery.
The Jews lived in well built fortresses. Their chief tribes were Banu Nadhir, Banu Quinuqa and Banu Quraizah. There were also many Christians in Madinah who were not in very good terms with the Jews because of their religious differences. The Christians were also foretold in their New Testament of the coming of the 'last of all prophet' who would lead them to the straight path of Allah. But when Rasulullah refused to accept their belief of Hazrat Isa (A.S.) being the 'son of God' they also turned their backs on the Muslims.
There were idolaters too in Madinah who were considered weak and insignificant. But those who became Muslims began to develop a sense of confidence and belonging as a nation and people who are being delivered from evil.
The tribes of Aus and Khazraij were mostly farmers, they were very disunited. Their warring attitude towards one another left them weak and of no importance in Madinah. But when these tribes embraced Islam and swelled the ranks of the Muslims, they became a powerful force to be reckoned with.
One of the first acts of Rasulullah after arriving in Madinah was to weld together the different tribes and conflicting groups of people of which the city and its suburbs were made up of, into an orderly confederation. It was Rasulullah 's greatest desire that there should be peace and harmony in Madinah and the Muslims should be able to pursue the worship of Allah without hindrance from any quarter. At the same time he desired that others of different faiths should be able to live their own lives freely and peacefully.
Rasulullah exerted all his efforts in every direction to achieve stability and harmony in Madinah in order to propagate his Divine Message. As a precaution against any unforeseen confrontation, particularly from the Jewish people, Rasulullah drew up a 'Treaty' which was signed by every ethnic group of Madinah, including the influential Jews.
The most important clauses of this Treaty were:
1. This is a document from Muhammed the Rasul of Allah governing the relations between the believers and Muslims of the Quraish and Madinah and those who joined, and followed and laboured (fought) with them.
2. All the inhabitants of Madinah will be considered as one nation.
3. To the Jews who follow us belong help and equality. He shall not be wronged nor shall his enemies be aided.
4. The Jews shall have their freedom of their religion without any interference from anyone.
5. It shall be the duty of the members of this 'treaty' to defend their allies from any attacks from the enemies of Madinah.
6. No non-Muslim member shall give any assistance or protection to the Quraish of Makkah who were virtually at war with the Muslims.
7. The people of Madinah shall not interfere with the life or religion of each other.
8. They must seek mutual advice and consultation, and loyalty is a protection against treachery.
9. It shall be the duty of everyone to assist the poor and the oppressed.
10. Massacres and killing shall be strictly forbidden.
11. The parties and the 'Treaty' shall be responsible for the maintenance and peace and the valley of Madinah shall be a sanctuary for the people of this document.
12. If any dispute or controversy likely to cause trouble should arise, it must be referred to Allah and to Muhammed the messenger of Allah.
A death-blow was thus given to that lawless custom of the Arabs, which had till now obliged the aggrieved and the injured to rely upon his own or the poor of his kinsmen in order to take vengeance or satisfy the requirement of justice. This document made Rasulullah the chief magistrate of the nation.
Rasulullah was also determined to include in the 'Treaty' other tribes living in the neighbourhood of Madinah. To achieve his objective, he journeyed to the strongholds of Banu Hamza-bin-Bakr; the people of Koh-e-Bawat; the Banu Mudallaj and others.
The ranks of the Muslims began to grow rapidly with most of the people of the tribes of Aus and Khazraj embracing Islam. By virtue of the 'Treaty' the Jews were reduced to a minority but they still held the economy of Madinah.
The Muslims were still hopeful that the Jews and Christians being the 'People of the Book' would one day accept Islam. But that was wishful thinking and the Muslims realised that they would not become true friends and protectors of the Muslims. They were only friends and protectors of each other.