This type of gaff (a pair glued together at one end, with the front card trimmed short) is employed in Dr. Ford B. Rogers' “The 'Ever-Ready' Forcing Pack”, see the advertisement in The Sphinx, Vol. 11 No. 7, Sep. 1912, p. 137. (For more details see also the full article Force Decks with Glued Long & Short Cards.)
Charles Jordan published the effect “Spook Card” in 1916 (see the advertisement in Magical Bulletin, Vol. 4 No. 4, April 1916). When he later published it in Ten New Prepared Card Tricks, 1920, p. 6, he also gave credit to Rogers: “To Mr. Ford Rogers, of Kansas City, I believe, is due the credit of first preparing cards in this manner.”
It was also used in an Ace effect in Ellis Stanyon's “The Four Ace Trick: Fourteenth Method” from Magic, Vol. 14 No. 12, Sep. 1914 - Sep. 1919, p. 101.
The gaff's common title “'Nightmare' Card” comes from Theodore Annemann's use of it in his marketed “Nightmare Effects,” 1928.
(Many people have made use of a simplified version of the gimmick, with two regular-length cards glued together at one end. London magician Eric F. Impey used this for his marketed effect, “The Super Educated Die,” c. 1928. He then republished the trick in Conjurer's Choice, 1930, p. 20.)