In April 1934 Ernest Hemingway bought a boat.

He got into debt to do it: not money-debt, but an advance on articles for Esquire magazine, tough, muscly pieces about big-game fishing and shooting lions that gave irreversible form to the writer's he-man persona but also left him open to inevitable homophobic sneers, for surely no real tough guy would be seen dead on the pages of a male fashion mag? He called his boat Pilar. It was his favourite female Spanish name. She was a production-line Wheeler Playmate, later customised with a flying bridge and copper screens, a solid Depression-era pleasure boat built on Coney Island and transported to Key West once the cheques cleared.

We think of Scott Fitzgerald, Hemingway's sponsor, friend and rival, as the American modernist most obsessed with money. There is the famous not-so-funny crack about Fitzgerald saying that the rich are different from us and Hemingway replying, yes, they have more money – a hard-to-read response that might bespeak rugged common sense but also expresses a deep and largely unnoticed envy. In his last years – and Paul Hendrickson's book is again, very bravely, about Hemingway's last two-and-a-half decades – Hemingway's career was often defined in terms of money. It's something that was passed on to, or picked up by, some of his followers, most obviously Norman Mailer, who in the decade after Hemingway's suicide was defined almost entirely by his attitude to women and by cash values and debts, advances, alimonies, lawsuits.

Hendrickson advances the notion that the buying of Pilar coincides with a profound change in Hemingway's prose. The sentences had lost that flat, declarative cadence of the early books and stories, with their additive logic – "and - and - and" – and resistance to subordinate or qualifying clauses. From the vastly underrated but undoubtedly problematic The Green Hills Of Africa onwards, and in fact right to the unvalued and much parodied Across The River And Into The Trees (how many of his contemporaries wrote spoofs along the lines of 'Across The Street And Into The Bar'?) Hemingway's sentences got not so much longer as more syntactically complex. It is as if owning a boat meant he could go out further and further, out of sight of shore, but did owning Pilar have that effect on him or was buying the boat in itself an expression of his need to cut loose in literature as well?

Arguments that hinge on "Hemingway the man" as against "Hemingway the artist" or the mythic "Papa" are always tedious, as are virtually all the recent biographies which gleefully expose the sloppy drunk behind the writer of lapidary prose and the sexual invert behind the sentimental old fool with war-damaged testicles who invariably addressed any young woman he wasn't bedding as "daughter". He only had boys, and what a troubled legacy they received.

It is easy to make Hemingway look bad. As Archibald MacLeish said of him, there is plentiful "historically correct" evidence for Hemingway as a "completely insufferable human being". The friendship with MacLeish was stormy. Hemingway said the poet was a nose-picker and a cowardly bore. MacLeish hated the macho stuff and they fell out when Hemingway, infuriated by the loss of a big fish, took to shooting terns with a double-barrelled gun, first one bird, then the grieving mate. It's a measure of how complex a psychology we are dealing with that one spends a long moment wondering whether a real sadist would have "spared" the surviving bird and widowed another pair with the remaining barrel. On another occasion, Hemingway shot his initials into the forehead of a gaffed shark.

And yet, and yet, MacLeish is able to describe him as "the most profoundly human and spiritually powerful creature I have ever known". Even allowing that the future Librarian of Congress generally mixed with fellow-poets rather than matadors and low-lifes, it's a remarkable verdict. It does seem that the so-called "divide" in Hemingway's nature was most sharply expressed when he stepped off dry land. The boat, though, was not just a moral rumpus room, a place for behaving badly outside territorial limits. It was also an expression of who he was as an artist, which is a man profoundly obsessed with the workings of things, whether a Lycoming engine running rough or a sentence with an awkward break in the middle.

It is easy to read the Gulf Stream – the non-human protagonist of the posthumous Islands In The Stream, also and inevitably undervalued – as the great river of American language, reaching back out towards Europe, and as the creative unconscious into which one throws bright lures and baits, often coming up with nothing, sometimes glimpsing a catch of breathtaking size and strength that one is fated to lose, constantly having to defend hooked fish against the depredations of sharks, which might stand for the critics, or might just be one's own spoiling demons.

The metaphor of fishing – which propelled Hemingway to his Nobel Prize when The Old Man And The Sea (overrated!) was published in 1951 – is only obvious because Hemingway made it obvious and because both halves of the equation, writing and fishing, have equal weight. It works as a metaphor because it works as a description of Hemingway's style: slacking the line before striking, keeping your line taut and economical, letting the small fish go ...

What's less obvious is how much the author needed a peculiarly American obsession with the sea. One finds it in Poe's maelstrom and the strange voyage of Arthur Gordon Pym, in Melville's hunt for the whale (the collective, metaphysical equivalent of Hemingway's individual quest for actual fish), in William Carlos Williams's self-definition as an offshore American, even in The Great Gatsby's luminous final cadence. It continues in Mailer, with the voyage transformed into moonflight. For Hemingway, though, putting out was part of an intensely effortful moral enterprise and a way of writing himself into the American literary canon; it's no coincidence that it is in The Green Hills Of Africa that he makes his famous comment about Huckleberry Finn. A landlocked American needed to lose everything but horizon, and that is what he achieved on Pilar.

The supporting cast all point in this direction, too, most obviously the young hobo Arnold Samuelson, who turns up at his door in Key West wanting advice on writing and becoming a greenfaced part of Pilar's first crew. He later wrote his own account of life with Hem, as everyone who met him from the 1930s onwards seemed to do, but Samuelson is worth a book in himself, a representative American of a wonderfully tragicomic sort.

Hendrickson also nails down (for the first time, I think) the identity of the rich woman who offers Hemingway money to make a return trip to Africa. She is almost certainly the super-rich Helen Hay Whitney, who has him round for tea, then bourbons, but whether sex in addition isn't clear; all that is, is that Hemingway declined the deal, a symbolic cutting free from the female to live independently as a man. The episode is alluded to in The Snows Of Kilimanjaro, the story in which, I think, Hemingway comes closest to a self-knowledge.

Hemingway's Boat might easily have turned into a slice of Americana, or an entertainment like Michael Palin's Hemingway's Chair (which is actually rather good). Instead, it turns a seemingly trivial search for an old boat up on cinder blocks in a Havana yard and a potentially mawkish concentration on the latter end of a life into a powerful meditation on what made Hemingway tick and what made him great. Though one needs other books for the first 35 years of the life, it supersedes them all.