NOTATIO

In my eclectic editorial journey, I am now starting to dedicate some time to chamber vocal music.
When copying the material from the original source, I found that the start of a new verse is not uppercased in the lyrics, while it is when one reads the full poem in a book.
First: when did the practice of uppercasing the first word of a verse became common practice?
Second: what approach should one follow in a modern edition of a lied for voice/piano? I recall Gould saying to uppercase it, but I’m not fully convinced, given the “horizontal” nature of lyrics reading.

Finally, do you know of a tool to check syllabication in German? It is almost always clear, but a proper tool would help.
Thank you

Uppercasing first letter of verses is a typographical device which only makes sense in a book. It is probably used because short verses seeem “hanging in space” when lower cased. They don’t make much sense in a music score, unless the capitalization is intended as a way to mark the beginning/end of the verse in order to aid the singer to stress the rhyme or the verse’s accents, or to make the singer conscious about them.

FWIW in the many thousands of words I've set over the last seven decades, I've always tried to keep the capitalization and punctuation the same as in the original. Sometimes there has been no capitalization, sometimes almost no punctuation and sometimes everything has been as near standard (including an upper case first letter for each line of verse) as one might encounter. I think this is the simplest (and certainly easiest) approach to take.

Even when I've received a libretto or poem specially written for my piece, I've generally kept to the original capitalization and punctuation, although in these cases I have occasionally made a few small changes.

In looking through a little of the German lieder repertoire, I see both systems being used. If one were not capitalizing initial words, supplying the poem in its original layout might be a good idea.

The source I'm using follows @Harpsichordmaker's suggestion, and it is a German source from 1810.
The extra stanzas of the poems are written below the music because it repeats exactly the same, and it shows capitalised first letter of every verse.
In my editions I would provide the full text in any case in the preface.