Soap on a rope solves that nagging problem: what to do with the soap when not lathering. Since showers occasionally do not possess soap trays, soap on a rope can prevent the need to leave soap on the shower floor, thereby eliminating a safety hazard. Later generations will doubtlessly consider the advent of soap on a rope as one of mankind's shining moments.

This product, along with loud ties, is a stereotypical father's day gift.
Soap on a rope can also be a gag gift for someone whose activities lean towards the illegal. The innuendo is that if or when the recipient winds up in prison, he can use the soap on a rope in the shower. This lets him avoid dropping the soap and having to bend over to pick it up.

(If you haven't figured it out yet ... bending over in a prison shower is reportedly not a healthy activity, particularly if the burly guy under the next spigot over has been washing it as fast as he wants ...)

This phrase has a much different meaning in Russia. While in other parts of the world it means 'To suspend a soap by means of rope', in Russia it means 'To get a tighter grip around your neck while being suspended by a rope heavily lathered in soap.
A common russian joke starts with someone being all depressed and then saying that life sucks and that they are going to go kill themselves and then someone pipes in and says, "Don't forget to lather!"

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