As Nick and Bill, long-time friends, await the storm referred to as "the three-day blow," they take refuge in the cottage of Bill's father, who is out hunting.  As they drink the whiskey of Bill's father, the two friends talk of baseball, fishing, their fathers, books, and favorite writers.  The discussion of baseball and the writers involves unscrupulous trades, corrupt baseball managers, and conspiracies about which most people know nothing.  Then, the conversation turns to authors, writers such as G. K. Chesterton and Horace Walpole--

"That's right," said Nick.  "I guess he's a better guy than Walpole....But Walpole's a better writer."

 The boys wish that they could share their personal passions with these men who are good writers and good people, in contrast to the corrupt managers and owners of professional baseball teams:

"I wish we had them both here,"  Nick said.  "We'd take them both fishing to the "Voix tomorrow."

This conversation between Nick and Bill threads the motif of a haunting vision of a real world in which human aspirations are corrupted by greed and the desire for power or by incompetence or the destructiveness of nature--"the three day blow."  The allusion to books and their authors represents Nick's wistful desire that he could control his life as the writers control their narratives and characters.

Why do Nick and Bill discuss literature in Hemingway's "The Three-Day Blow"?

In my opinion, the two young men discuss literature because their discussion shows that they are something of dilettantes.  It shows that they are really pretty shallow.

In this story, the two of them discuss baseball, literature, fishing, and Marjorie.  This is a pretty wide range of topics, but they don't really seem to know much about either baseball or literature.  They are just kind of talking superficially about those things.

To me, this goes along with how they act when they're drunk. When drunk, they try really hard to show that they're practical.  So when they talk, they try to show they know things when they don't really.  When they act (while drunk) they try to show they're competent when they're really not.