Green’s Dictionary of Slang

to beat, to cudgel, to thrash (cite 2001 uses a literal towel).

1705		J. Dunton Life and Errors (1818) I 356: I would towel him myself (or make his Countryman do it) if I did not think him an honest man .
1825		Pierce Egan’s Life in London 30 Jan. 5/2: Jem Ward’s brother and a man called Young Gas towelled each other about till they were tired.
1838		Crim.-Con. Gaz. 29 Sept. 46/2: Missy Crow say if she no go she get what ladies call a good towelling.
1842		Whip & Satirist of NY & Brooklyn (NY) 19 Feb. n.p.: The grocer’s boy should be well towelled.
1846		Censor (London) 11 Jan. 5/2: The poor fellows who suffer the knout of the tyrant [...] are well supplied with linen, as they have plenty of Russian towelling.
1850		Fast Man n.d. n.p.: We don’t think it much of a lark to have a woman who towels you every night, and we are sorry for your pal.
1859		Hotten Dict. of Modern Sl. etc. 111: towel to beat or whip. In Warwickshire an oaken stick is termed a towel ? whence, perhaps, the vulgar ver.
1878		‘’Arry on Politics’ in Punch 11 May 205/2: O scissors, to read our own Telly a-towelling wood-chopping Bill.
2001		D. Looser Boobslang [U. Canterbury D.Phil. thesis] 192/2: towel v. to assault a victim using a towel to blind and confuse him, and to ensure the anonymity of his attacker(s).