Moody was laid down on 9 December 1918 at Squantum Victory Yard of the Bethlehem Shipbuilding Corporation at Quincy, Massachusetts, and launched on 28 June 1919.

Assigned to the United States Pacific Fleet, Moody departed Boston, Massachusetts, on 9 February 1920, loaded torpedoes and ammunition at Newport, Rhode Island, and steamed via New York City, Guantanamo Bay, Cuba, and the Panama Canal to the United States West Coast, arriving at San Diego, California, on the 31st.

[clarification needed] She operated along the California coast through June 1920, and then departed San Francisco, California, on 1 July 1920 for Washington, where on 10 July 1920 she joined the cruise of United States Secretary of the Navy Josephus Daniels, United States Secretary of the Interior John B. Payne, and Admiral Hugh Rodman, Commander of the Pacific Fleet, to Alaska.

On an inspection tour of Alaskan coal and oil fields and looking for possible fleet anchorages, the cruise touched at nine ports including Sitka and Juneau, and lasted for nearly a month.

The movie studio altered her appearance to resemble that of a World War I Austro-Hungarian Navy minelayer and hired the marine salvage and construction firm Merritt-Chapman & Scott to place charges of dynamite aboard her at carefully planned locations.