According to my informant who grew up on a farm in a poor family, in the old days mothers used to put baking flour on cuts as a folk remedy to stop bleeding. He heard this from one of his brothers, who actually told him that the remedy was a false one. This brother of his had cut his foot when he was younger, and his sister had put flour on it in an attempt to staunch the bleeding. The blood didn’t stop flowing.
Essentially, it was a poor person’s remedy. It may have gotten its reputation as a cure for bleeding due to its absorbency, but would never be very effective on anything larger than a paper cut as it doesn’t really have anything to do with blood coagulation.