Long associated with the economic history of the county, coal was discovered in the area of present-day Tracy City in the 1840s while Ben Wooten's sons were digging out a groundhog from beneath a stump. In 1848 a young Irishman, Leslie Kennedy, followed the construction of the Nashville and Chattanooga Railroad in search of moneymaking opportunities. While hiking through the Cumberland Plateau he became interested in coal outcroppings and returned to Nashville to seek financial backing for a coal mining venture. Nashville attorney William N. Bilbo listened to his scheme and bought the Wooten land and vast tracts belonging to the Samuel Barrell heirs, before heading to New York to find developers for the coal lands. Samuel Franklin Tracy and a group of financiers traveled to Tennessee and purchased Bilbo's holdings, which they used to form the Sewanee Mining Company with Tracy as president. When the Sewanee site proved less productive than expected, the mining company extended their tracks ten miles farther to the Wooten site, which became the town of Tracy City. The first coal was shipped from the site on November 8, 1858.

After the Civil War, creditors in New York and Tennessee won judgments against the company and bought the property. Arthur St. Clair Colyar, a Tennessee attorney, became the president of the new company, which became the Tennessee Coal, Iron, and Railroad Company in 1882. Colyar recognized the need for coke in the iron smelting industry and experimented with its production. In 1873 the company erected the famous Fiery Gizzard Coke Iron Furnace at Tracy City and produced fifteen tons of iron before it collapsed. That original furnace demonstrated the efficacy of Tracy City coal and determined the economic future of the city.