The reason billionaires donate so much is a real give-away

On status and the new rich

"Money was wonderfully plenty," writes Mark Twain in Roughing It, his account of the California gold rush. "The trouble was, not how to get it - but how to spend it, how to lavish it, get rid of it, squander it." He goes on to describe the spasms of donation that would occasionally run through the mining towns, some charitable request or other touching off a fierce paroxysm of giving.

The most notable of these is the story of the Sanitary Flour Sack, a 50lb bag of flour originally auctioned to raise money for the care of Union wounded. After frenzied bidding the sack was sold to a mill man for $250. He was asked where he would have the flour delivered, and replied: "Nowhere - sell it again." When the auction finally broke up, the original owner had taken $8,000 in gold for the fund - and still held the bag of flour.

The sack then toured other gold towns, with civic rivalry boosting its earnings still further (every town wished to outdo its predecessors in reckless munificence). By the end of its tour it was estimated that it had been sold for a grand total of $150,000 - and they were still able to bake cakes with the flour and sell those, too.

This story came to mind when I read about Ted Turner's decision to hand over $1bn to the United Nations, by all accounts the largest charitable donation in history. I once listened to Mr Turner addressing the Edinburgh Television Conference; he was supposed to be talking about the changing nature of broadcast news, but he took time out during his rather erratic speech to suggest a solution to global war. If I understood his argument correctly - and it was not easy to follow - it involved creating a bellicose kind of theme park somewhere in the Caribbean, where contending nations would compete to sink de-commissioned battleships. Whoever got the highest score would win the dispute - without bloodshed. Senior figures from British broadcasting listened in bemusement. Was it a rambling joke? Was he pitching some new kind of CNN game show? Myself, I decided he was quite mad - and at first this latest gesture seemed all of a piece. Give away your money by all means, but why to the UN? Why boil off the profits of your labour in supporting a bureaucracy so cumbersome and byzantine?

But if Mr Turner is crazy, he is crazy like a fox. For one thing, it turns out that he has ring-fenced his gift. It is dedicated to very specific programmes: his money is to be spent on the ground, not at the Four Seasons. For another, his flamboyant gesture is as much to do with the provocation of others as with a private desire to give something back. He wants to start a gold rush, but this time in reverse - a competitive frenzy in which the rich stampede to show just how much they can give away. And there are some interesting parallels with the communities Twain describes in Roughing It. During the first gold rush, fortunes were both volatile and virtual; a man who could not afford to feed his horse at breakfast time might be able to retire by sundown on the strength of his shares in a mine - paper that he might well have bartered for a beer at lunch time. Youth was no bar to success and the conventional pace at which a man accumulated wealth had been discarded.

Much the same is true of those working the great mother-lodes of the late 20th century - media and computing. Teenagers sleeping in garages make paper fortunes overnight. What's more, the sheer scale of the return renders existing valuations of money quite pointless. The New York Times recently tried to work out when Bill Gates would become a trillionaire, prompted by the fact that Forbes's annual list of the world's richest men had gone out of date within two days: in that time Gates' paper fortune had increased by nearly $4bn (two of those billions accumulated in one morning). When you have this much money you can buy anything, even the moon. (The Apollo programme spent approximately $25.4bn between 1961 and 1973. Even allowing for inflation, Bill could probably go there for a fraction of the cost today - the Russians would probably even throw in a complimentary space station.)

But when you can literally buy anything it's usually the case that you start to hanker for the things that don't have a market price. Twain tells the story of a grizzled miner arriving in San Francisco and offering $150 to be allowed to kiss a stranger's three-year old child. He could have been lavishly entertained in the city's finest whorehouse for that sum but it wasn't soft skin he wanted - it was a touch of innocence, a commodity quite unpurchasable in the territories. In a similar way very rich people try to buy two things with their fortunes - once they've finished with the easy stuff like mansions and yachts. They buy remembrance for when they are dead, and esteem for while they are alive.

The useful twist for the rest of us is that these virtuous goods are always offered at auction - they don't come with a sticker price. This operates at all levels of the economic ladder, incidentally. Anyone who has attended a school fund-raising auction will have seen the way that pride and peacock display can be tapped for charitable ends. The potlatch ceremonies of the Pacific Coast Native Americans, in which hosts gave lavish gifts to their guests as a display of status, were unusually explicit about the degree of self-assertion involved in such competitions - as part of the ceremony, the host might abuse those who were enjoying his largesse, and even destroy money. In rewriting the rules of social supremacy Ted Turner has revived potlatch for the world's growing tribe of billionaires. His was a stunning opening bid - and if precedent suggests anything, it won't be the last.