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It is supposed that the old Slavonic name of Madan was Kroushovo, and some of the local people cal it Selo (Village).

The name Madan is newer and is connected with ore mining (Madan is actually the Arabic word maden for a mine.

The geographic location of Madan and especially the traces of long-past intensive ore mining in the town itself and the surrounding area show that a settlement probably existed on the site as early as Antiquity. There are sources pointing out that lead-ore mining dated as early as 6-5 c. BC, as early as the Roman Age.

The exploitation of the ore fields continued during the Second Bulgarian Kingdom. There is medieval mining equipment discovered in the old mining galleries.

The legend says that the small village of Madan was a large settlement with a highly developed primitive industry some 200-300 years ago, during the Ottoman rule. All kinds of objects were manufactured, from horseshoe-nails to coffee-grinders and weapons. These products were sold almost all over the Ottoman Empire, and the weapons were bought by the Bulgarian revolutionaries.

During the era of Ottoman feudalism, the Madan was not only a mining settlement, but also a commercial and crafts centre of the neighbouring hamlets. The commerce was in the hands of professional merchants who had economic connections with Thessalonica, Xanthe, Gyumyurdzhina, etc. in present-day Greece. The local inhabitants kept many sheep and goats. Local craftsmen wove from the sheep's wool and the goats' hair (and additional wool bought from the Aegean region) textile products that were sold as far as Drama, Cavalla and even Thessalonica.

By 1850, there were 400 houses in Madan - 60 of them in the market centre and the rest in the neighbouring quarters. People cut or burned down the forests to open some space for new settlements and cornfields.

The cornfields were at a rather high altitude and were sown with rye, barley and maize. There are still cornfields at an altitude above 1500 m.

An evidence to the Bulgarian tradition of many centuries in the Rhodope folk costumes and the evident Slavonic continuity is the traditional woman's costume, whose complicate design contains nothing redundant; each detail has been selected with much sense of measure and aesthetics, preserving the basic design, cut and colours of the old Bulgarian costume.

Madan was liberated from the Ottoman rule on 20 January 1878, but remained a part of Turkey under the Treaty of Berlin. Its liberty was fully won as late as the Balkan War of 1912.

The ore mining was further developed in the following years. Germans and Russians worked here setting the foundations of the Goroubso company.

The village of Madan was proclaimed a town with Decree №292 of the Presidium of the national assembly on 22 August 1953.

As a modern mountain town, Madan has its own economy and culture.

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