Honorary degrees is a cheap way of increasing prestige by associating the university with someone who already has prestige.
There's a difference between "first" and "representative of how a thing caught-on and came to be established and practiced" -- the first uses might not be representative of neither the reason for widespread adoption nor current use.
There are countries whose universities need (and do) no marketing at all otherwise, because they are public and state sponsored, but still give honorary degrees to honour important contributors from outside the academic field.
This article should answer your question. It was recently posted (har har har) in HN:
http://priceonomics.com/why-do-colleges-give-out-honorary-de...