I gave this short explanation in Yahoo! answers:

In the Pacific Northwest, missionaries and settlers were astonished to find that chiefs and even ordinary people would hold events where they'd give away huge amounts of goods and food (several times as much as a person could eat) amid songs and dancing celebrating the giver's good fortune. Sometimes, people would even burn or destroy the gifts they'd been given, not out of disrespect, but simply to show that they valued the gesture more than the goods themselves. It was considered a sacred duty in some cases, and in others, it was simply considered a way to share the wealth of the tribe evenly. Some people did it for fun! Most people considered it harmless: the sea would always give forth salmon, the trees, their wood, and so on. What was given away would always be replenished.

This puzzled the whites, who could not understand why they would squander their resources in such a careless manner: the potlatches were considered "frivolous" and a "savage superstition", and effectively banned in the late 19th century. (Oddly, this was at a time when rich whites were spending untold fortunes on party-giving, themselves.) Potlatches were studied by anthropologists rather extensively in the early 20th century, and so 'potlatch' has become a generic term (like 'shaman') in anthropology for celebrating altruism.

Nowadays, it's understood that people can't be jailed simply for wanting to hold a good party, so there are potlatches held all over the Pacific Northwest by Native people, who might spend a whole year and as much as $10,000 USD for a party lasting a single weekend.

It's a gentle irony that nowadays, White people count their wealth in what they can give away, too. Perhaps we're just getting civilized.