Where did the phrase throw in the towel originate?

When you throw in the towel, you are giving up. You are admitting surrender or defeat. In its original form, it was called ‘to throw up the sponge’; this appears in The Slang Dictionary (1860). The reference is to sponges used to cleanse combatants faces at prize fights. A contestant’s manager throwing in the sponge would signal that the fighter had had enough. In recent years, towels have been substituted for sponges at fights, and consequently, replaced the term in the expression too.