This Ngram find references "blue bag" multiple times, using it in a way that makes me suspect it's a term for some specific type of luggage. In the meantime I must give you some account of a startling eye-opener which our beloved Marie received in administering a decoction from the Blue Bag for a toiling moiling East End audience. Ultramarine is used not only to produce a blue, but also a white. Every housewife well knows that blue of some kind must be used to counteract that yellowish tinge which linen and cotton goods acquire when washed. This use of the blue color is familiarly called using the blue-bag, but using the whitening bag would, in truth, be the more appropriate phrase. As a general thing, the blue-bag is used far too freely. The effect should not be, as it generally is, to leave a blue tinge, but only to neutralize that yellow tinge with which we unavoidably associate the idea of imperfect cleansing. City of Moorabbin Historical Society (Operating the Box Cottage Museum) Book, Carroll, Brian, Early Melbourne sketchbook, 1977 City of Moorabbin Historical Society (Operating the Box Cottage Museum) Education kit, Department of Veterans Affairs, Schooling, service and the Great War, 2014

Many well remember that some of the smart ditties that our Marie warbled ere more or less tinged with squeezes from what the dear girl herself called " the blue bag." Maugham was a very successful playwright and very familiar with the theatre; and “blue bag” was certainly used in this sense among theatre people during WW II, not that long after Cakes and Ale was published. Here’s actress Naomi Jacob (b. 1884, so about ten years younger than Maugham) writing about her work with E.N.S.A. productions for the troops: I searched a number of slang dictionaries and didn't find any slang use of "blue bag," aside from Eric Partridge's note in A Dictionary of Slang and Unconventional English, fifth edition (1961) that Sidneyites had, since circa 1910, used "the Blue Bags" as a slang term for "Newtown footballers."Sting of Bees.—Although the poison a bee emits when it inserts its sting, is proved to be a highly concentrated acid, the application of all alkalies will not neutralize the acid. The more gentle alkalies—chalk, or the "blue bag," are much more likely to effect a cure, and cannot injure[.] The blue bag was also used for treating insect bites as well as stings, as we learn from this letter to the editor of the [Perth, West Australia] Western Mail (December 17, 1915):

In additional to laundry, I use soapnuts everyday – for natural rubber-glove-free washing up, surface cleaning, the loos, glass and shiny things. True Indigo Unfortunately, this stilbene group of chemicals is harmful to aquatic life with long lasting effects. It is also harmful to humans. It is connected to respiratory difficulties and skin troubles and harms people with pre-existing eye conditions. I have noticed that my water board monitors this chemical in our drinking water, but as far as I know they do not remove it and it has long term aquatic toxicity… What did people use to whiten their white laundry in the past? Context suggests that what Maugham means is off-color or bawdy jokes. Note that Mrs. Hudson's use of the blue bag is contrasted with her ‘propriety’:E.N.S.A. shows are blue!” So are many of the shows given in music-halls in England. No E.N.S.A. show is blue at its final rehearsal at Drury Lane, that I can swear. Each show is vetted and vetted most carefully. Manuscripts have to be submitted, and the blue pencil is not spared when objectionable matter is found. If, after the show has gone out, either at home or overseas, the “blue bag” is used too freely that is the fault of the party manager, or going further, the fault of any E.N.S.A. officer who sees the show and hears “smut” and does not prohibit it. Dirt is not wished for, it is not permitted and if everyone concerned did their duty as they should do it it would all be eliminated. Remember there will always be “comics” who like to push in a dirty gag and get a cheap laugh . . .

Performers in the music-hall era seem to have viewed the "blue bag" not as a receptacle to pull naughty innuendo about naked bunnies out of, but as the familiar nineteenth- and early twentieth-century laundry aid—a cake of bluing tied in a cloth bag and immersed briefly in cold rinse water to help make white clothes look less yellow or dingy, or applied to an insect sting to make it less painful. Henry Chance Newton, mentioned in the preceding excerpt, uses the phrase several times in Idols of the "Halls": Being My Music Hall Memories (1928): Bluette - There used to be information online saying that this was "sold in the detergent or bleach aisle of most supermarkets and many smaller grocery As others have noted, "blue-bag" has been used in connection with laundry bluing since at least the 1860s. From " Purple Dyeing, Ancient and Modern," translated from a German article in Aus der Natur (not later than 1864) and printed in Annual Report of the Board of Regents of the Smithsonian Institution, Showing the Operations, Expenditures, and Condition of the Institution for the Year 1863 (1872): And from The Economical Housewife: A Complete Practical Guide to Domestic Management for the Use of Both Mistress and Maid (1880):

In this reference the term "blue bag" is apparently used to mean a small flannel bag in which you place a ball of "bluing". This is then added to a load of laundry "whites" to help neutralize yellowing. We celebrate the history and contemporary creativity of the world’s oldest living culture and pay respect to Elders — past, present and future. And earlier still, from Albert Chevalier, Before I Forget: The Autobiography of a Chevalier D'industrie (1901): It is impossible for art, with the tiniest "a," to thrive very long in our music-halls under existing conditions. It may occasionally come as a surprise, and for that reason even please for a time ; but it cannot and will not find a home there until the "Blue Bag" yields to the "Blue Pencil." I am not narrow-minded. If certain blasé individuals with jaded palates want spice, give it to them—let them wallow in it ; but see that it is in a place set apart, not in a hall where each programme contains a dead-letter footnote, requesting the audience to report to the management anything objectionable in the entertainment. Let the prurient-minded have a hall to themselves. Call it the Obscenity, but for the sake of the majority—the lovers of clean, wholesome amusement—make it an offense, punishable at law, for anyone to encroach on the prerogative of those engaged in pandering to the tastes of the Dirty and Depraved.

Laundry bluing is made of a colloid of ferric ferrocyanide (blue iron salt, also referred to as "Prussian blue") in water.

The little blue bag was stirred around in the final rinse water on washday. It disguised any hint of yellow and helped the household linen look whiter than white. The main ingredients were synthetic ultramarine and baking soda, and the original "squares" weighed an ounce and cost 1 penny. One of the traditional ways of rousing laughter in illegitimate drama is by innuendo. The technique is not by any means new nor is it confined to illegitimate drama—it is to be found in Elizabethan plays of four hundred years ago. In the music hall, precisely what is assumed is left to the imagination of each member of the audience, but the implication is invariably of a kind delightfully described by Chance Newton as "cerulean," or "a touch of the blue bag." It was a favorite comic device of Max Miller's. By means of stressed rhymes he would lead an audience to expect a blue joke, but would so time what he said that he could rely on being interrupted by the loud laughter of the audience before he reached the significant word. He would then feel free to upbraid the audience vigorously for having dirty minds and giving him a bad name—and this technique was far from peculiar to Max Miller. THE USE OF BLUE, AND THE ABUSE. Much blue is very objectionable. Dip the blue-bag into the [clean, cold rinsing] water until it is just perceivable that it has been in. Bluing is usually sold in liquid form, but it may also be a solid. Solid bluing is sometimes used by hoodoo doctors to provide the blue color needed for " mojo hands" without having to use the toxic compound copper(II) sulfate. Bluing was also used by some Native American tribes to mark their arrows showing tribe ownership. [ citation needed] See also [ edit ] Many washerwomen—charring-women, notably—have an immense fondness for blue, for they can hide for the tome being, by its aid, any carelessness they have been guilty of as regards washing thoroughly. Blue covers up the yellow hue consequent upon this. Very blue clothes, too, look bad, but a slight colouring of it adds to the beauty of well-washed garments.