A euphemism for "pubic hairs," itself in this context a euphemistic metonymy for "balls". It is used mostly in expressions such as "to have someone by the short hairs," which is to say "to have someone in a very difficult or hopeless situation," equivalent to "to have someone by the balls."
It was a real Catch 22! They had me by the shorthairs, and they knew it.
The hairs at the nape of your neck. Often used in the phrase "to be got/caught/held by the short hairs", which means that someone has you trapped in something, and you are unable to easily escape. Although often confused with the phrase "short and curlies" (which refers to pubic hair), the phrase "to be caught by the short hairs" is common from as far back as 1890 when it was used by the author Rudyard Kipling, whereas the phrase "to be held by the short and curlies" didn't come about until WWII when it was used primarily as military slang.
Although I'd rather come to your party, I promised my co-worker I would watch GoT with him. He took a photo of me sleeping at my desk last week, so he's really got me by the short hairs; I can't cancel on him, or he could get me fired.
To be captured or trapped by an opponent ie by the hairs on the back of your neck. Common usage today has warped the term to mean by the pubic hairs but this is not the origin.
If we make the wrongmove our enemies will have us by the short hairs.