c. 1300, "having a rough, hairy, or shaggy surface" (originally of animals), a word probably of Scandinavian origin: compare Old Norse rogg "shaggy tuft" (see rug). "The precise relationship to ragged is not quite clear, but the stem is no doubt ultimately the same" [OED]. In Middle English ruggedy (late 14c.) also was used.
Of ground, "broken, stony," by 1650s. Of made things, "strongly constructed, able to withstand rough use," by 1921. By 1620s, especially of persons or their qualities, as "unsoftened by refinement or cultivation," thence "of a rough but strong or sturdy character" (by 1827). The specific meaning "vigorous, strong, robust, healthy," is American English, attested by 1847.
We were challenged with a peace-time choice between the American system of rugged individualism and a European philosophy of diametrically opposed doctrines — doctrines of paternalism and state socialism. [Herbert Hoover, speech in New York, Oct. 22, 1928]
Hoover said the phrase was not his own, and it is attested from 1897, though not in a patriotic context. Related: Ruggedly; ruggedness.