We present a translation and analysis of an unpublished manuscript by Albert Einstein in which he attempted to construct a 'steady-state' model of the universe. The manuscript, which appears to have been written in early 1931, demonstrates that Einstein once explored a cosmic model in which the mean density of matter in an expanding universe is maintained constant by the continuous formation of matter from empty space. This model is very different to previously known Einsteinian models of the cosmos (both static and dynamic) but anticipates the later steady-state cosmology of Hoyle, Bondi and Gold in some ways. We find that Einstein's steady-state model contains a fundamental flaw and suggest that it was abandoned for this reason. We also suggest that he declined to explore a more sophisticated version because he found such theories rather contrived. The manuscript is of historical interest because it reveals that Einstein debated between steady-state and evolving models of the cosmos decades before a similar debate took place in the cosmological community.