early 14c., "rough, shaggy, careworn" (originally of animals), from 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]. Meaning "strong, robust" is American English, 1848.
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, 1928]