I think it's from even earlier. IIRC, the first punch cards didn't distinguish between upper and lower case. These were used for basic administration, so one case was enough. E.g. https://en.wikipedia.org/wiki/Punched_card#IBM_80-column_for...
Baudot (the code, not the man) was 5 bits, so only 32 codes. It couldn't even fully encode the alphabet and the digits; shift codes are used to switch between two sets of symbols.
Lowercase was added quite early though. Some hot metal casting typesetting machines ran on paper tape. They typically used six bit codes with multiple sets of shift cases. Upper, lower, digit, symbol, etc. (The physical construction of the teleprinter or typesetter had some relation to the nature of the code used.) The use of paper tape decoupled typesetting from the work of preparing and laying out the physical plate for printing. Typesetter and printer could be in different rooms or buildings, or maybe even on different continents; those tapes were being run over telegraph circuits by the late 1920s.
https://archive.org/details/LinotypeHandbookForTeletypesette...
This code contains two shift states which map directly to physical Linotype features:
1. Shift and Unshift states map the first 45 codes to the 90 character positions in a standard Linotype magazine.
2. Some Linotype matrices (letter molds) have two font variants (e.g., roman and italic); the UR and LR codes shift between these.