For years, Carnegie has been interested in manufacturing Bessemer steel, as he thinks that steel would function better than iron for building railways. In 1872, Carnegie judges that the time is ripe for finally entering the steel manufacturing industry, and he partners with a number of colleagues from his railroad days to form a steel mill corporation, the Edgar Thomson Works. Construction on the steel mill coincides with the “Panic of 1873,” a credit crisis that leads to a depression in the American economy. Several of Carnegie’s partners are forced to pull out, and Carnegie sells his stocks in other corporations and “pours the money into the mill to keep it going” (95).

Carnegie encounters further crisis when his business partner and old friend, Tom Scott, falls into financial trouble. Scott had been trying to build the Texas Pacific Railroad, financing it by borrowing loans that he was unable to pay. Scott asks Carnegie to endorse the loans so he can keep the company solvent, but Carnegie refuses, fearing that his new steel mill would be dragged “down in the wreckage” if the Texas Pacific Railroad goes bankrupt (96). Carnegie’s decision protects his steel mill and earns him respect from the Pittsburgh banking community, but it also costs him his friendship with Scott.