Long after sailors, fishermen and agricultural colonists had domesticated the entire coastline of New England, the harsh, glacier-scarred interior of NEW HAMPSHIRE , with its dense forests and forbidding mountains, remained the exclusive preserve of the Algonquin Indians. Only the few miles of seashore held sizeable seventeenth-century communities of European settlers, such as Strawbery Banke at Portsmouth . <br> Even when the Indians were finally driven back, following the defeat of their French allies in Canada, the settlers could make little agricultural impact on the rocky terrain of this "granite state." Towns such as Nashua, Manchester and Concord grew up in the fertile Merrimack Valley, but not until the Industrial Revolution made possible the development of water-powered textile mills did the economy take off. For a while, ruthless timber companies looked set to strip all northern New Hampshire bare - very few of the trees you see now are original growth - but they were brought under control when the state recognized that the pristine landscape of the White Mountains might turn out to be its greatest asset. Large-scale tourism began towards the end of last century; at one stage fifty trains daily brought travelers up to Mount Washington. <br> Ever since becoming the first American state to declare independence, in January 1776, New Hampshire has been proud to go its own idiosyncratic way. The absence of a sales tax, or even a personal income tax, is seen as a fulfillment of the state motto, "Live Free or Die." Alternative sources of revenue include state-owned liquor stores in which, unlike in neighboring states, you are able to purchase alcohol on Sundays. The stores were set up after the failure of Prohibition, and have been enthusiastically promoted ever since: they even have them in freeway rest areas. The state has long gained inordinate politi cal clout as the venue of the first primary election of each presidential campaign, with its villages well used to playing host to would-be world leaders.<br> One less ideological aspect of New Hampshire's individualism is the emphasis on a healthy outdoor lifestyle. Hiking, climbing, cycling and skiing are enjoyed both by energetic locals and by the many visitors who drive up from Boston and New York. The major destinations are Lake Winnipesaukee , and Conway, Lincoln and Franconia in the mountains further north. Some have grown rather too large and commercial for their own good, but if you steer clear of the paying "attractions," the lakes, islands and snowcapped peaks themselves remain spectacular. To see the bucolic rural scenery more usually associated with New England, take a detour off the main roads up the Merrimack Valley - to Canterbury Shaker Village near Concord, for example.