World War I
World War I began in Europe in 1914, and Thompson was sympathetic to the Allied cause. Since the U.S. did not immediately enter the war, and because he recognized a significant need for small arms in Europe (as well as an opportunity to make a substantial profit), Thompson retired from the Army in November of that year and took a job as Chief Engineer of the Remington Arms Company. While with the company he supervised the construction of the Eddystone Plant in Chester, Pennsylvania, at that time the largest small arms plant in the world. It manufactured 1914 Pattern Enfield rifles for British forces, and Mosin-Nagant rifles for Russia.
The introduction of trench warfare in the First World War changed tactics substantially, and by 1916 Thompson was experimenting again with automatic small arms, this time with an eye towards designing a weapon which troops could use to clear an enemy trench—what he called a "trench broom." Thompson studied several designs and was impressed with a delayed-blowback breech system designed by John Blish, a commander in the United States Navy. With Blish as a partner, Thompson obtained the necessary venture capital to form the Auto-Ordnance Company, and set to work fine-tuning what would eventually become the Thompson submachine gun.
When the United States finally entered the war in 1917, Thompson returned to the Army and was promoted to the rank of brigadier general. He served as Director of Arsenals throughout the remainder of the war, in which capacity he supervised all small-arms production for the Army. For this service he was awarded the Distinguished Service Medal. He retired again after the war, in December 1918, and went back to work perfecting the "Tommy Gun."
Thompson originally pursued the Autorifle concept: a rifle utilizing the Blish principle delayed-blowback action to avoid the complexity of recoil-operated and gas-operated actions. Testing found that the military issue .30-06 cartridge was too powerful to work satisfactorily using the Blish system.
Thompson eventually decided to use the same .45 caliber ammunition in the Thompson submachine gun that he had vetted for use in the M1911 while in the Army. The weapon was patented in 1920, but the major source for contracts had dried up with the armistice. Thompson therefore marketed the weapon to civilian law enforcement agencies, who bought it in respectable quantities. However, by 1928 low sales had led the company to financial crisis, and Thompson was replaced as head of the Auto-Ordnance Company.
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