During pioneer times when supplies and items were scarce mothers used whatever they had at hand to make dolls for their children. This included handkerchiefs and pillowcases.

Included in this tutorial is a section on Page 3 on How-To Make Pioneer Handkerchief Doll, like the doll in the picture to the right.

The Hankie Dolls page of the Folk Dolls chapter of The Complete Photo Guide To Doll Making book by Nancy Hoerner, Barbara Matthiessen, and Rick Petersen has a tutorial on making a faceless hankie doll on pages 82-85 that shows how easy it is to make a simple faceless hankie doll.
According to The Complete Photo Guide To Doll Making book - Page82, "Hankie dolls were also called church dolls or pew dolls because they were first made for children to play with during church services. The idea was that if the doll was dropped, it wouldn't make any noise."
"The dolls have been made in various ways and we will show you two different ways. Similar dolls were made from lacy women's hankies and given to a newborn baby girl with the intention that she would later carry it as her bridal hankie."