Short Hills, N.J. — This rich, leafy suburb of New York City looks peaceful. But during the past 25 years it has experienced a revolution. In 1960, no Jews lived in Short Hills. A private developer had founded the town at the turn of the century as a preserve for WASPs - white Anglo-Saxon Protestants - and real estate agents later continued to turn away prospective Jewish buyers.
Today, most of the barriers have fallen. Some 30 to 35 percent of Short Hills's 19,500 citizens are Jewish. Like a huge Gothic church towering over a medieval town, the modern spire of B'nai Jeshuran towers over the community. With some 1,300 families, B'nai Jeshuran has the largest synagogue membership in New Jersey. Jews participate fully in the town's business, charity work, and politics.
''We have shed the ghetto,'' says B'nai Jeshuran's rabbi, Barry Greene. ''We work with Christians, we play tennis with them, room together in college, and go to the same parties.''
The story is the same through much of the United States, in Scarsdale and Shaker Heights, Wellesley and Winnetka, and indeed through much of the Western world. More than ever before, Christian societies are opening up. Jews are responding by integrating themselves with tremendous success into these majority non-Jewish settings - while trying hard to preserve their Jewish identities.
Jewish pride is on the rise. A generation ago, sociologist Milton Himmelfarb of the American Jewish Committee polled Jewish college students and found that the majority would have ''preferred'' to have been born Episcopalian. He recently repeated the poll and found many students responding, ''What is an Episcopalian?''
''Jewish self-hate is being replaced by Jewish self-respect and assertiveness ,'' says Mr. Himmelfarb. ''Many of these students are also wearing 'kippas' (the Jewish skullcap) in public, something few would have dared to do 20 years ago.''
But this growing acceptance within Western society poses its own risks. Many Jewish leaders are worried by a reverse trend - an apparent weakening of Jewish identity.
Whereas only about 1 in 8 American Jews married out of the faith during the l 950s, American Jewish Committee statistics show that almost 1 in 3 now is intermarrying.
Moreover, the birthrate of this declining number of Jewish couples is below replacement level, resulting in a drop in the Jewish-American population from about 6 million to 51/2 million over the past 30 years. The most pessimistic Jewish demographers estimate that if current trends continue there will be only 21/2 million Jews in America by the end of the century.
''This (intermarriage and the low birthrate) isn't done out of self-hate or a desire to convert, as in the past,'' says Rabbi Alexander Schindler, president of the Union of American Hebrew Congregations. ''It's the sting that comes with the honey of freedom.''
The Jewish community in France, the largest such Diaspora group after the Soviet Union and the US, also is experiencing these contradictory trends.
On the one hand, despite France's history of anti-Semitism and Jewish assimilation, a Jewish renaissance is taking place there. Nives Fox of the American Jewish Committee office in Paris estimates that the number of books, plays, and TV programs on Jewish themes has tripled in the past 20 years. Such eminent young intellectuals as Andre Glucksmann and Alain Finkielkraut, who once ignored their Jewish identity, now glory in it.
Scholarly Jewish work also is booming - to the point where one young scholar, Charles Mopsik, has found the funding he needs to devote years to translating the multiple volumes of the Zohar.
On the other hand, Jewish religious observance and education are declining. France's chief rabbi, Rene-Samuel Sirat, worries that only 7 percent of French Jews receive a thorough Jewish education and that about 85 percent receive no Jewish education at all.
''We are a people and we have a culture, but in the end what are we without our faith?'' he asks.
Perhaps only in Israel do Jews not share these concerns. There, even nonreligious Jews are steeped in Jewish traditions. Study of the Jewish scriptures, for example, is an integral part of public school curricula. Because Jews are in the majority, there is no temptation to conform to the norms of a larger group.
''My 12-year-old daughter reads the Torah like the newspaper,'' says Ze'ev Chafets, former government spokesman. ''Everything here runs by a Jewish clock. She doesn't even know what Christmas is.''
Back in Short Hills and elsewhere in the Western world, though, the desire to preserve a strong, separate, Jewish identity runs counter in many ways to the greater integration most Jews seek. For many officials of leading Jewish-American organizations, Short Hills-style immersion in non-Jewish institutions will ultimately mean the disappearance of a meaningful Jewish identity.
''We make contradictory demands on our children,'' says Rabbi Arthur Hertzberg, a leading Jewish scholar and former president of the American Jewish Congress. ''Be a success just like a WASP Yalie, we say - but then come home Friday night (when the Sabbath starts), and above all, marry a Jewish girl.''
For most of their history since the AD 70 sacking of Jerusalem, Jews did not face this dilemma. They lived apart from their Christian and Arab neighbors, conducting commerce with them but nothing more. At night, they returned to their communities. There, Jewish courts were responsible for law and order and Jewish study was the only available education.
Life moved at a largely Jewish rhythm, regulated by the 613 mitzvot which tell a Jew how to behave - from what to do before eating a piece of bread to how he should commune with God.
Much of this isolation was imposed from the outside. In both the Islamic and Christian worlds, Jews were relegated to second-class status. They ended up living in a separate world.
For their part, most Jews did not object. Their faith and practices required them to live in a community of fellow Jews. Observance of the kashrut laws (covering preparation and eating of kosher food) is meant to sanctify eating. But it also makes it difficult for an observant Jew to dine with someone who does not follow the laws.
This idea of sanctification and separation is intrinsic to the Jewish view of the covenant between God and the people of Abraham. In traditional Jewish belief , God called the Jews on Mount Sinai to become the chosen people - not better, more moral, or more blessed than non-Jews, but with unique obligations to Him. Jews living by the 613 mitzvot understand this to mean they were chosen to be different.
The French Revolution in 1789 began to break down the walls of separation. Its call for ''liberty, fraternity, and equality'' promised that Jews could be citizens on an equal footing with all other citizens.
Yet the emancipation initiated by the revolution had a catch. Who are you, Napoleon asked a little later, Jews or Frenchmen?
Most Jews chose Frenchmen - and, in doing so, forfeited their right to form a separate community with special obligations to Zion. Their decision quickly translated into assimilation, and a wave of conversions to Christianity.
''The deal was clear,'' says French religious historian Maxime Rodinson. ''Religion was to be like joining a chess club, nothing more.''
Jews and non-Jews want to be close
Today, following the Holocaust and the founding of Israel, demands that Jews make such a choice are muted. For the most part, both Jews and non-Jews want to be close - while retaining their differences.
In France, Jews are trying to achieve this balancing act by constructing an active Jewish community. In 1955, there were five kosher butcher shops in Paris and two kosher restaurants. Today, there are 100 such butcher shops and 25 restaurants. The first Jewish day schools and Jewish community centers also have been opened. Even a Jewish political pressure group, Renouveau Juif, has been formed.
''All these things would have been forbidden (in France) before World War II, '' says Roger Ascot, editor of L'Arche, a Jewish magazine. ''No one would have dared edit a Jewish publication then.''
Is such a community sufficient, however, to maintain a Jewish identity? Mr. Ascot is not sure.
''We finally have won the right to be different,'' he says. ''But at the same time, 80 percent of French Jews don't participate in the (Jewish) community. They have dissolved into republican, secular France.''
The situation is similar in the US, although there are signs that the search for a separate Jewish identity is succeeding better than expected - despite the growing intermarriage, falling birthrate, and weakening religious ties. Some new studies show that Judaism is attracting more converts than it loses through mixed marriages, and that more mixed couples raise their children in the Jewish faith than expected. In particular, too, while religious identification seems to be waning, a new secular type of Jewish identification based on social organizations and support for Israel may be replacing it.
''People may be less observant than before,'' says Harvard sociologist Nathan Glazer, ''but the evidence shows they continue to identify themselves as Jews.''
A glance back at Short Hills supports this hypothesis. Despite Jewish integration, some walls remain between Jews and non-Jews. Many Jews tend to concentrate in certain neighborhoods and socialize among themselves. Christians have their own private clubs which do not allow Jewish members.
''When I came to town in 1949, I didn't know a single Jew and most Short Hills people didn't want to associate with them,'' says the town's former mayor, Earl Cryer. ''Today, things are much better. We realize we're all God's children , that we must work together, though I'm sorry to say that some old attitudes remain.''
Jewish leaders in Short Hills are wary about latent anti-Semitism, but they do not criticize the restricted country clubs. This separation, they say, helps keep alive a Jewish identity in a society that tends to blur the traditional meaning of that identity.
''Private clubs are private,'' says Rabbi Greene of B'nai Jeshuran. ''We should do everything to foster cooperation, but we should also respect differences. If people want to form clubs on the basis of character traits and mutual interests, that's fine with me.''