The idea of making chains by overlapping words is due to H. E. Dudeney, and is probably a follow-on of Lewis Carroll's word ladders. Dudeney used words of uniform length and constant overlap. Christopher McManus introduced Word Ways readers in November 1990 to Ana-Gram-mar (AGM) chains, ones in which the word length may vary, but there is always single overlap (each letter appears in exactly two words): house-man-slaughter-house, and gossy-pol-yester-morning-tide-water.
"A Survey of Directed Word Chains,"
Word Ways: Vol. 26
, Article 15.
Available at: http://digitalcommons.butler.edu/wordways/vol26/iss1/15