The old woollen merchants who left their mark on so much of the Cotswolds, must surely haunt Nailsworth as almost no other town. It was an important centre for clothiers, and many mills line the waterway that runs through it. Hopefully, they would be reassured bythe good use their factories have been put to.

The mills at Dunkirk - which employed many a local - are gradually being turned into luxury flats, with a small set of rooms dedicated to preserving relics of their working past. There's Egypt Mill, which is now a family pub and restaurant where diners can relax and watch the old waterwheel turning, or the ducks dabbling in the millpond. Once the waters here ran red from dyes emptied into the stream by local businesses, earning it the title of the Red Sea.

The 19th Century Ruskin Mill, an old woollen mill, is now a craft centre, inspired by the work of William Morris, John Ruskin and Rudolph Steiner. The emphasis is on the traditional here, with care of the environment also a priority.

Older people from the town will tell you of the important families who once lived in the big houses - the Clissolds, the Newmans. They were held in great affection by locals, and their maids and cooks are still to be found among the last of the senior generation. There are also a few who remember the poet WH Davies - "What is this life if full of care, We have no time to stand and stare?"

The cottage where he spent his final years, is to be found in Watledge, a hamlet of Nailsworth, with a plaque over the door. It is still owned and lived in by one of his distant relations.

WH Davies's house is a sweet, low cottage, and there are many of these archetypal beauties to be found. Alongside these, there are some fine Jacobean and Georgian merchants' houses. Stokes Croft, in Cossack Square, is known as "the barracks". When it was restored thirty years ago, graffiti was uncovered from local troops billeted there in 1812 and 1815. It was also used for Russian prisoners during the Crimean War - hence the name of the square.

Further up, Chestnut Hill House was used as a hospital during the First World War. Although more serious cases were treated in Stroud, recovering soldiers were sent to Nailsworth to be tended, and to recuperate. One local resident can tell of her mother working here as a Red Cross nurse. "It was all bedpans and rubber sheets!" she later recalled.

Many residents can recall one aspect of Nailsworth's more turbulent past - the great flood of 1931. It was the last year of the town's well-known horse show, a local event that attracted a great deal of support. The show was just finishing, when the heavens began to open. It rained as few remember it ever raining before or since. The many watercourses that run through the town, that had been so useful for industry, now conspired to do their worst. Rubbish that had been carelessly thrown into them, had blocked some of them completely. And as the levels rose, water began to pour down the valleys into the town centre. In Cossack Square, the water was up to a man's thighs. Houses were flooded, and shops lost all their wares.

The clearing up operation went on for days. It was amazing that no-one lost their life, though animals are reputed to have died. As time goes on, it's harder to separate the stories that have grown up from the truth. But certainly, it was a sight that no-one wants to see again.

Nailsworth has some interesting religious buildings. St George's, the parish church, was built at the end of the 19th Century. Of note is the contemporary mural inside, depicting the life of the town. Far older is the Quaker Meeting House in Chestnut Hill, built in 1689, which contains original, simple and elegant, furniture.

Today, life in the town thrives. There are many interesting little shops that you could stroll around for hours - gift shops and craft shops, and a newly-opened pottery. It's also a useful little place, with two ironmongers, one of which is still owned by the Bruton family who founded it in the 19th Century. The remains of the old railway is still to be seen - its old tracks which wander through woodland and grass are now a lovely cycle trail.

Look out for the town's festivals. It's well worth planning a visit to coincide with one of these. They're a tribute to the people who live here, who want to celebrate the vibrancy of this little centre. Visit Nailsworth, and enjoy the sights, but don't expect to get to know it overnight. Like the waterways that run through it, just remember, still waters run deep.

*The town's archivist can be contacted at Nailsworth Town Hall on Monday mornings, for further information about the history of the town.