In WW1 the Germans had the fine Artillery Luger with 32 rd snail drum and long barrel plus the Mauser C-96 that fired automatic, but needed a trench sweeper urgently. Technically, the Italians produced the first functional SMG, the Villar-Perosa, in 1915 as a light aircraft weapon and later as an experimental ground weapon. But the Kaiser and Imperial German Army had Bergmann develop the world's first practical combat SMG- the MP-18/1 from 1916 forwards. Schmeisser designed it and by early 1918 it was issued on the front with German Stormtroopers for maximum effectiveness. Around 10,000 were produced. It fired the 9x19 Parabellum round at 500 rpm and featured a 32 rd snail drum mag inserted horizontally near the front of the air cooled jacketed barrel. It was a great weapon that was illegally manufactured even after Germany's defeat in 1918 and led to the 1920s MP-28 which in turn led to the MP-38 and 40 "Schmeisser" of WW2 (which was actually designed by Vollmer)! It was copied by many nations and served in many foreign wars from the 1920s-WW2. Its only drawback was that it was heavy at 11 lbs and could accidentally fire if the butt was struck hard!

http://world.guns.ru/userfiles/images/smg/smg76/mp18-I-1.jpg