Green’s Dictionary of Slang

handkerchief-head n.2

[SE handkerchief + -head sfx (2); along the lines of towel-head under towel n.; ult. the keffiyeh head-dress worn by Arabs]

(US) a derog. term for an Arab or a man who wears a turban.

[US]S.J. Perelman in New Yorker 17 Oct. 40: I can never tell those handkerchief heads apart [HDAS].