Why did the old man smile when Hughie gave him the gold coin in the story "The Model Millionaire"?

In Oscar Wilde's "The Model Millionaire," a young man named Hughie Erskine performs an act of kindness that yields him great reward. Although he is handsome and well-liked, Hughie does not come from wealth. The woman he loves doesn't mind, but her father won't allow them to marry until Hughie earns 10,000 pounds. Any money he has must be carefully saved if he has any hope of happiness with Laura.
On his way to visit Laura and her father one day, he stops by to visit his friend, Alan Trevor, a talented artist. He watches as Alan paints a portrait of a beggar, and he is moved by the model standing in the studio:

He was a wizened old man, with a face like wrinkled parchment, and a most piteous expression. Over his shoulders was flung a coarse brown cloak, all tears and tatters; his thick boots were patched and cobbled, and with one hand he leant on a rough stick, while with the other he held out his battered hat for alms.

Hughie remarks to his friend that the man looks miserable and realizes that the more despondent the model, the more that the painting will sell; he believes his friend is profiting off of the pathos of another. When he hears that the model receives only a shilling per sitting, whereas the artist makes 2,000 guineas, Hughie declares that the beggar deserves a higher percentage of the profit. Alan laughs at this, and when he must leave the room for a moment's errand, Hughie examines the beggar-man closely and makes a decision:

He looked so forlorn and wretched that Hughie could not help pitying him, and felt in his pockets to see what money he had. All he could find was a sovereign and some coppers. "Poor old fellow," he thought to himself, "he wants it more than I do, but it means no hansoms for a fortnight"; and he walked across the studio and slipped the sovereign into the beggar’s hand.
The old man started, and a faint smile flitted across his withered lips. "Thank you, sir," he said, "thank you."

The old man smiles because, as Hughie and the reader discover, he is not really a beggar; he is the wealthy Baron Hausberg. He simply chose to don the costume of a beggar for the portrait, as Alan later reveals to Hughie. After Hughie left the studio that day, the baron peppered Alan with questions about the young man willing to give charitably to a stranger he thought was in need. Upon finding out that Hughie is the one in need of money, Baron Hausberg ends up sending Hughie the 10,000 pounds to help him marry Laura. Just as Hughie was moved by the sight of a beggar, the baron was touched to see such pure-hearted and simple generosity, which he then returns in kind.