Theodore H. Eickhoff and George E. Goll joined the company, which initially had to contract out all of the prototypes and machine work to a company Thompson knew, the Warner & Swasey Co. Eventually, AOC moved into office space in the Meriam Building on Euclid Avenue, Cleveland, Ohio and the machining operations at the Sabin Machine Company on Carneige Avenue. With over a year of testing, it was found that the lock would only work with the .45 ACP round and so dropping the idea of an automatic rifle (in 30-06), Thompson decided to concentrate on a small, lightweight, personal machinegun and by the summer 1918, all the major design difficulties had been solved. The Annihilator I as it was codenamed could empty a 20-round magazine in less than a second but the first shipment of prototypes destined for Europe arrived at the docks in New York City in 11 November 1918. With the First World War over, what would the company do? In 1919, Thompson gave the company the mission of adapting the weapon for non-military applications. Thompson also wanted to call the weapon something that would distinguish it from its larger, more cumbersome brethren. They considered the names â€˜autogunâ€™ and â€˜machine pistolâ€™ (a name that would find favour in later years) but finally chose â€˜sub-machinegunâ€™. At a meeting of the AOC Board of Directors, the weapon was officially classified as a sub-machinegun and to honour the man responsible for its creation, it was named the Thompson Sub-Machinegun.
With hostilities over, the company realised that significant sales to the military were unlikely, but they continued nonetheless to try and attract both the US Army and the US Navy, hoping that the weapon would be accepted as standard issue. The first public demonstration of the weapon was in August 1920 at the National Matches held in Camp Perry, Ohio and everyone who saw it was amazed at its rate of fire â€“ 1,500 rounds per minute, emptying a drum of 100 rounds in about four seconds. Pleased with the public reaction to the new sub-machinegun, Thompson approached the Colt Firearms Co. with a proposal to manufacture it under license. Thompson hoped that the Colt name, along with its ties to the military, would help get it accepted into service. However, the unexpected happened â€“ Colt was so impressed with the weapon after a thorough evaluation, it offered to purchase all the rights to the weapon for a cool $1,000,000. However, Ryan advised that if the weapon was worth one million dollars to Colt, it was worth more than that to AOC. The Colt offer was rejected and a contract signed for the production of 15,000 firing mechanisms ($680,705) as well as spare parts ($9,105). Contracts were also signed with the Remington Arms Co. for walnut butt stocks, pistol grips and foregrips ($65,456) and the Lyman Gun Sight Corporation for adjustable sights ($69,063) and after 1926, the Cutts Compensator. AOC then shut down its R&D operation in Cleveland and moved it to a rented building on Coltâ€™s grounds to oversee production. The first guns came off the production line towards the end of March 1921. These weapons were given to AOC salesmen and demonstrated to the US Army and US Marine Corps, as well as various armed forces across Europe. Despite an enthusiastic response initial sales were low. Not only was the weapon ahead of its time, most of the major powers were seeking a peace dividend and substantially reducing their defence spending, leaving tight budgets that gave little room to buy semi-experimental weapons with no combat record. Even the US Army was more disposed to ignore the bargain basement price of $225 and pay $650 for a Lewis Gun.
Given this low demand, AOC refocused their efforts on Local and State Law Enforcement. They took advantage of the publicâ€™s concern over gangsters who would â€˜hit-and-runâ€™ â€“ robbing a bank then driving away as quickly as possible, often exchanging gunfire with the Police. A number were also bought by the IRA (around 500) in 1921. Even with sales to the Police Departments of New York City, Boston and San Francisco as well as the State Police of Pennsylvania, Massachusetts, West Virginia, Connecticut and Michigan, sales to this sector were still lower than expected. With just over 3,000 units sold by 1925, AOC resorted to advertising the Thompson sub-machinegun as the solution to most of the problems one would need a firearm to solve. It is hard to believe, but in those days, almost anyone could purchase such a weapon if they had $225, either by mail order or popping into a gun shop or sporting goods store. In fact, it wouldnâ€™t be until 1934 that machineguns and various other classes of firearms or accessories, such as suppressors / silencers, short-barrelled rifles and shotguns were placed under strict Federal regulation with the National Firearms Act (NFA). In the meantime, AOC quickly became aware of the damage these weapons could do if they got into the wrong hands and so formulated an agreement with its dealers to restrict sales to only those parties that were on the right side of the law. Unfortunately, not all of its dealers abided with this agreement. Stepping back a bit, a major turning point in American history is 16 January 1920 which saw the enactment of the Volstead Act, whereby the US Government banned the import, manufacture and sale of alcoholic drinks. Criminals quickly realised the profit potential of providing the public with the alcohol it craved, bringing them into direct conflict with local, state and federal law enforcement. It also provided a foundation for the establishment of organised crime in the USA. To protect their operations, the gangsters bought the Thompson sub-machinegun and eventually, a number of gangsters became associated with the weapon, such as Al Capone, John Dillinger and â€˜Machine Gunâ€™ Kelly. It is interesting that, even though the Thompson could be sold to anyone on the open market, they commanded high prices in the criminal underworld, commanding anywhere between $1,000 and $2,000 apiece, probably due to the crackdown on unscrupulous dealers.
Ironically, it was about this time that the Thompson was finally accepted for service by an official branch of the United States Armed Forces. The US Coast Guard began issuing weapons to patrols sailing off the East Coast while the US Post Office bought a consignment to equip the US Marines protecting the mail trucks which were frequent targets for heists. In 1927, these same guns were used by the US Marines in the jungles of Nicaragua, so successfully that the Corps bought another 200. The popularity of the Thompson and is usefulness in close quarter fighting led the Corps to adopt the Thompson in 1930, years ahead of the Army.