PANAMA HATS are not from Panamá

True, they are from Ecuador.
The how and when they ended up being called PANAMA HATS is nevertheless connected with Panamá and... Theodore Roosevelt.
These hats are made of a special material called Paja Toquilla (Toquilla Straw). Hence the real name in English should be TOQUILLA STRAW HAT which is Spanish is SOMBRERO DE PAJA TOQUILLA which is what we call them in Ecuador.
In order to export these hats to Europe or Asia these hats were first sent to Panamá and then sent to their final destinations. It was there that they renamed the hats according to the place they were sent from and that was Panamá. All of this happened before the construction of the Panamá Canal which started at the beginning of the twentieth century. It was then that Thedore Roosevelt came to Panamá to oversee the works and was photographed wearing one of our hats. It was then that the name Panamá was attached to the Paja Toquilla Hat and so it has remained until our days.
TOQUILLA STRAW HATS  are not cheap because they are hand made and each one is a piece of artwork that will perhaps be lost to us in time since the best of them are produced in a place called Montecristi in the Manabí province where some of the best hat weavers still exist. And those weavers are getting old and sadly their apprentices are not as talented. Besides there is competition coming from Southeastern Asia where they are producing hats as well: their quality is good but not as good as the Montecristi hats, nevertheless, the price seems to play a decisive role since as all good copies Asian hats are also cheaper.

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