Travel: A city with a heart of gold: Birmingham's Jewellery Quarter, the world's largest, is a living museum, writes Chris Arnot

An elderly man with stooped shoulders and a cadaverous face put down one of two bulging carrier bags and rummaged in his pockets. 'Looking for his bus pass,' said Ken Hughes, watching from the other side of the road. 'You wouldn't think there were thousands of pounds-worth of gold and silver in those bags.'

Those paid to ferry precious metals and gems around Birmingham's Jewellery Quarter tend not to dress in Homburg hats and overcoats with astrakhan collars. They weave their way anonymously through the streets and alleys north-west of the city centre, conveying half-finished rings and trinkets to and from the poky premises of metal spinners, stone cutters, diamond setters and others who ply their trade in this fascinating square mile.

Mr Hughes can spot them, but he has had plenty of practice. As an official guide, he shows two or three parties a week around one of Britain's more unlikely tourist spots. This is no defunct piece of industrial archaeology, spruced up for the heritage industry. More than 5,000 people earn their living here in the world's largest area of jewellery manufacture.

It developed in characteristic Birmingham style, a product of industrial evolution rather than grand design. Ann Colmore, a descendant of a wealthy family of silk importers, tried to impose some order on the Brummies when she had the streets laid out in the 1700s; yet before long the inhabitants had converted all but a fraction of the living space into workshops producing buttons, buckles and pen nibs. The switch to jewellery followed the gold rushes of the mid-19th century, which led to a growth in the domestic market, stimulated by the Royal Family. Such was the demand that workshops were expanded or knocked down and rebuilt when the leases ran out.

The result is an architectural hotch-potch, predominantly Victorian but with some handsome Georgian survivors and a few functional modern additions. 'I had some visitors from Bath once,' Mr Hughes said. 'I thought they'd be dismissive, however they were genuinely intrigued. 'Where we come from,' they said, 'it's all Georgian squares and crescents. Seen one and you've seen 'em all.' '

Some of the smarter properties in the Jewellery Quarter have been snapped up by architects, surveyors and marketing consultants. But it remains primarily a manufacturing area, with a sense of bustle and purpose. Windows are crammed with advertisements for staff: 'School leavers required to learn mounting.'

Peer through the front window of Turleys Repairs on Warstone Lane and you get a flavour of what's going on in all those workshops. A man in a leather apron is bent over an ancient, pitted workbench strewn with tools. By his side a gas burner used for soldering is kept constantly alight. Only the push-button phone suggests that the end of the 20th century is nigh.

The Quarter became a conservation area in 1980, but a disregard for aesthetics is still evident on the facades. One diamond setter's nameplate obscures the top of a superb arched doorway. Next door, a lurid green-and-gold blind protrudes over the portals of Hockley Radio Cars and Annie's Take-away. A rash of similar blinds has spread through some streets as manufacturers set out to advertise what they've been doing privately for years - selling directly to the public. A 22-carat wedding ring that might cost pounds 200- pounds 250 in the shops is available here for pounds 105.

'I had one woman who came up from the Home Counties and saved herself pounds 100, even after she'd paid the train fare,' Mr Hughes says. 'Before 1980, anybody who wanted to buy at discount would have had to creep up the back stairs to a little hatch. But it's surprising how much business was done like that. Everyone in Birmingham knows someone who works in the Jewellery Quarter, and those who work in it know everybody else. It's like an extended family.'

Local folklore has it that errand boys in the Twenties used to push bullion from workshop to workshop in open, three-wheeled baskets. Sometimes they would bump into friends and stop to play football, using the precious bundles as gold posts.

Now, as before, employers are careful with filings. Trouser turn- ups and aprons are turned out on to the workshop floor and the sweepings burnt: tiny pieces of gold are all that survive. In the Fifties, some employees worked out how to evade the boss's eagle eye by surreptitiously pushing a handful of filings into their greasy hair. After work they would wash their locks and retrieve the gold.

At the Smith and Pepper factory on Vyse Street, each craftsmen was issued with his ration of gold, the amount being noted in a ledger. The jewellers would work 11 to a bench, chain-smoking in an atmosphere redolent of cyanide and ammonia. At night, finished and unfinished work, scrap and unused gold, were weighed and recorded.

This process went on every working day until 1981, when Tom Smith, his brother, Eric, and sister, Olive, decided to close the family firm. Like most of their employees, they were well past pensionable age. Unlike them, Tom, Eric and Olive had never married and had nobody to whom they could leave the business. So, one Friday afternoon, they dismissed the staff, locked the front door and left, for good.

This Marie Celeste of factories remained abandoned for nine years. Papers lay scattered in the office upstairs; the benches were strewn with tools, tea mugs and cigarette packets. When work began on the Jewellery Quarter Discovery Centre in 1990, about 70,000 items were catalogued from the Smith and Pepper factory, including a milk bill from 1899.

After some repairs, everything was put back as it was, right down to the ageing jars of jam and Marmite in the office cupboard. Today, the factory is part of the Discovery Centre, which won the 'Best Industrial Museum of the Year Award' for 1993. It is well worth a visit.

The Jewellery Quarter Discovery Centre, 77-79 Vyse Street, Hockley, Birmingham (021-554 3598): guided tours, pounds 2. Ken Hughes's tours of the entire Quarter cost pounds 24, take about three hours and are designed for parties of a dozen or so (021-472 1061). He will, however, give tours for smaller groups.

(Photographs and map omitted)