Born in Kirkdale, Liverpool, in 1897 (not Dublin, nor 1901 as he generally implied) to a working-class family, Hanley probably left school in 1911 and worked as a clerk, before going to sea in 1915 at the age of 17 (not 13 as he again implied). Thus life at sea was a formative influence and much of his early writing is about seamen.
Then, in April 1917, Hanley jumped ship in Saint John, New Brunswick, Canada, and shortly thereafter joined the Canadian Army in Fredericton, NB. Hanley fought in France in the summer of 1918, but was invalided out shortly thereafter. He then went to Toronto, Canada, for two months, in the winter of 1919, to be demobbed, before returning to Liverpool on 28 March 1919. He may have taken one final voyage before working as a railway porter in Bootle. In addition to working as a railway porter, he devoted himself "to a prodiguous range of autodidactic, high cultural activities – learning the piano ...attending ... concerts ... reading voraciously and, above all, writing." It is also probable that he later worked at a number of other jobs, while writing fiction in his spare time. However, it was not until 1929 that his novel Drift was accepted, and this was published in March, 1930.