Green’s Dictionary of Slang

(US) to tease.

1879		Cincinnati Enquirer 7 Sept. 10/7: Gaff, Taffy--Almost similar to the above [i.e. to kid], but in milder form.
1888		St Paul Dly Globe (MN) 26 Feb. 9/2: Stop all lally-gagging and taffying between operators and outsiders over the wires.