This building and expansion spawned new public and cultural institutions, intense activities which were driven by economic necessity, crowding and poverty in the traditional community.

Beit Ya'akov was founded by a group of settlers under the leadership of Rabbi Moshe Graf, one of the appointees of the "Horodna Kollel" of the Ashkenazic community, and a member of the council of Mea She'arim.

[2] Pinchas Grievsky explains in his book The Yishuv Outside the City Walls that the land of the neighborhood is 44,000 square cubits in area, and was purchased for a price of 500 Napoleonic gold.

This group, though its leaders are honored and active, most of them are poor and miserable and cannot pay the costs for each one.Grievsky in his book adds: This neighborhood, when it was founded in 1876-7, was too far from the city.

In the first years, because of the isolation of the neighborhood, the few men had to rotate night guard duty to prevent raids by Arabs who lived in the surrounding area.