Anyone know the history on how US citizens were legally allowed to make a select fire ar15 lower before 1986??. As it surprises me citizens are legally allowed to have these lowers as long as they were registered sometime in the early 80's... anyone care to shed some light on this?

Was it some NFA loop hole with the autosears?

Then the NFA got smart and decided to place the ban hammer down on the law??

...

Prior to 1934, everything was completely legal, no registration or anything.  The National Firearms Act of 1934 created Title I and Title II firearms.  Title I consists of Rifles, Shotguns, Handguns, and Firearms.  These are not registered, but must be transferred over state lines by a dealer.  Title II consists of Weapons Made From a Rifle (typically an SBR), Weapons Made From a Shotgun (Typically an SBS), Silencers, Destructive Devices, Any Other Weapons, and Machine Guns.  Title II must be registered with the ATF at the time of manufacture and transfer.

In 1968, the Gun Control Act banned the importation of Title II firearms.

In 1986, the Firearm Owners Protection Act had a poison pill added to it in an attempt to prevent it from passing.  That poison pill banned the registration of Machine Guns, but not the transfer.

So, prior to 1934, anyone could own whatever they wanted.  After 1934, anyone could still own whatever they wanted as long as they paid the ATF $200 for their Title II firearms.  

After 1968, foreign Title II weapons were no longer allowed to be imported.  You could however import a Title I foreign firearm and convert it to Title II once it was in the US.

After 1986, Machine Guns could no longer be registered.  Prior to that, anyone could make one.  You could either buy one that came that way from the factory as long as its transfer to you was registered with the ATF, or you could buy a Title I firearm and convert it to Title II after registering it with the ATF.  You can still do that with all Title II firearms, except Machine Guns.

I have to say this is almost unconstitutional... I get the idea about the whole bad guys spraying down people and trying to limit what they can get there soulless hands on but wow... that is kinda an F'd up law.

One of the first court cases that involved the NFA ruled that it was unconstitutional.  However when all the appeals eventually made it to the supreme court the NFA was upheld.  One reason the court case was lost was because the person that was charged with crossing state lines with a SBS had died, ie the defendents or their lawyers didn't bother to show up to the supreme court.

And it seems up until the DC vs Heller, US vs Miller was the case always used for the side of gun control.
you can read more on the case here
United States v. Miller

Also you can read more about the NFA here

Prior to 1986, you could just file your Form 1, wait for approval, then drill the sear hole in your semi-auto AR15. Amazing times....

Except it doesn't limit shit that the bad guys can get their hands on.  The black market doesn't care about laws.

Its not just "almost" unconstitutional. It is.

Yeah .. but the trust route wasn't available until 2000 and alot of CLEOs would not approve machine guns.

The trust route was technically "available" but hadn't been discovered in the legalese IIRC.

One still had the option of an LLC I suppose.