The Jews of Madina. In Madina there was a considerable number of Jews They were wealthy, controlled the trade, and commanded great influence. The Holy Prophet followed the policy of 'live and let live'. He accordingly entered into a treaty with the Jews. According to the terms of the treaty the Jews were to enjoy religious freedom and there was to be no interference in religious affairs. The Muslims and the Jews were to be on friendly terms, and were to help each other in the promotion of objects of mutual interest. It was stipulated that Muslims and the Jews would help each other in case of an attack by an enemy. No party was to give protection to the Quraish, and in case the Quraish invaded Madina, both the Muslims and the Jews were to join hands in the defense of the city.

Betrayal of the Jews. The Jews knew that in their holy books there were references to the advent of a prophet in Arabia. They were however under the impression that the prophet would rise from their midst. When the Holy Prophet rose from the ranks of the Quraish in Makkah, the Jews recognized in him all the signs of prophethood foretold in their sacred books. When the Holy Prophet came to Madina the Jews thought that he would be subservient to them and would acknowledge their supremacy. When the Holy Prophet followed an independent policy, the Jews followed the policy of betrayal and embarked on a campaign of ridicule.

Abu Bakr and Finhas the Jew. One day Abu Bakr came across Finhas, one of the Jewish rabbis. Abu Bakr invited him to Islam, but Finhas ridiculed the offer. The Holy Prophet had enjoined on the Muslims to spend in the way of Allah, and according to the Holy Quran this was to be a loan against God repayable manifold the original amount. The Muslims were forbidden to charge interest. According to the religion of the Jews, interest was permissible. In this context Finhas argued: "We are rich, but your Allah is poor for He asks loan of us. Had He been independent of us He would not have given us interest, which He has denied to you."