Treasure Worth = XP
Isn’t treasure supposed to be its own reward? The problem in early D&D is that it wasn’t. In fact you couldn’t do a whole lot with treasure except for accumulate it and gain XP from it. That’s right; you gained XP just for picking up a gold piece. To be fair, how much you gained was based on how much challenge the treasure’s guardian represented, but a simpler method is to place the challenge XP fully in the guardian (in 4th Edition, this means the monsters, traps, hazards, or skill challenge) and let wealth be the reward wealth is by its very nature—purchasing power.
(And that's the nice one. The section after it is the sort of thing I'm certain makes Ripper X's blood boil.)
First of all, the above quote shows a woeful lack of knowledge of the history of D&D. Yes, the equipment lists might seem a tad skimpy, and no, there were no shops to buy magical swords from. But there were many things to do with your treasure. At lower levels, you could hire henchmen to join you on your adventures and equip them with the best gear your money could buy. If you knew a long journey was in the future, you could purchase a mount (a light riding horse for a mere 25 gp all the way to a heavy warhorse for 300 gp in the 1e PHB), and you'd of course want barding to protect your mount. You'd need pack animals to carry the rest of your gear. If you needed to cross water, you could purchase boats. The cheapest, a small barge, cost 50 gp, but if you wanted to travel in style, you needed the large galley for 25,000 gp. And these numbers, of course, didn't include crew or provisions.
And then, of course, there was what James Maliszewski refers to as "the end game" of clearing wilderness and building your stronghold. By that point, you'd acquired a few followers, and while they came with gear, they still needed to be fed and it was never a bad idea to upgrade their equipment when possible. And castles, of course, don't come cheap. And this is all assuming your DM didn't enforce the rules requiring you to purchase training in order to go up a level after you'd earned the experience points.
That all said, I did know folks who stockpiled their gold, squirreling it away for a rainy day, but that was never a safe option. If you kept it in a "safe place", it could be stolen. If you kept it on you, you risked losing it all in shipwreck, or to pickpockets, or if you were ever slain or captured. The safest thing to do with your wealth was to buy things with it that were difficult to run off with or destroy. Land was a popular option, and our heroes usually bought an old, derelict farmhouse on the edge of the village or inside the town they used as their base of operations.
So the notion that players ended up with large stockpiles of wealth because there was nothing to buy after the initial equipment purchase and a few upgrades is rather silly. Yes, I played in a few games where the PCs never needed to eat, never hired henchmen, and never bought mounts or real estate or anything like that. Most of these games were either short-lived dungeon-delves or, in the case of the one campaign I played in like that, run by extremely stingy DMs who had us always on the ragged edge of bankruptcy.
Still, there usually came a time, around about what most considered the "sweet spot" of D&D, which was roughly levels 4 through 9, when the world of strongholds and followers seems distant, and the PCs are beginning to really come into their power. The need for henchmen seems less, the basic equipment has been purchased, and the primary expenses are mostly just food and cornering the market on the 100 gp pearls necessary for the identify spell. It was easy for the DM to get lazy about the players' stockpiled wealth as well; the days when lucre was necessary to motivate the PCs are long gone. They're part of the world now, with allies in need and enemies eager for revenge. Keeping the players "hungry" means something very different at levels 4 through 9 than it does at levels 1 through 3.
Still, it's rarely a good idea to allow that gold to just pool in the PC's basement. It just doesn't fit the genre. So, in my Moldvay/Cook/Labyrinth Lord hack, I'm allowing the earning of XP from gold. However, it's not gold acquired that will earn the XP, but gold spent. This will encourage the players to spend the loot their heroes win. I don't really care how they spend it, so if they just want to blow their entire share on "ale and whores", I certainly won't complain. It's what Fafhrd and the Gray Mouser would do, after all.
And no, that's not an original idea of mine. Unfortunately, I can't find where I read it first, and even if I did, I doubt that author was the originator of the idea anyway. The 'net is just awash in all these cool ideas, and I sometimes feel like a beachcomber, hoping the storms and tides throw the best treasures my way but knowing a few really choice pieces are lost to the depths.