Australian history . . . does not read like history, but like the most beautiful lies. And all of a fresh new sort, no moldy old stale ones. It is full of surprises, and adventures, and incongruities, and contradictions, and incredibilities; but they are all true, they all happened. -- Mark Twain, "Following the Equator".

The Aussies haven't let Twain down in the 1980s. Their latest "beautiful lie that's true" is taking possession of the America's Cup, that most coveted of nautical prizes that for 132 years was in the possession of the elite New York Yacht Club. "Until 1983 the America's Cup was the province of a few eccentric New York millionaires," says Australia II spokesman Vern Reid. "We're making it into an event everyone can enjoy."

When the America's Cup was brought halfway around the world to its new home in Perth, the ornate silver trophy was paraded throughout Australia before wildly enthusiastic crowds like a medieval spoils of war, then placed in a red plush case on the top floor of the exclusive Royal Perth Yacht Club.

Here everyone is welcome to come see it -- at the New York Yacht Club it was accessible to members only -- provided they mind their manners and are properly attired. "Why I suppose that means they should look clean, fresh and nice," explains a dignified club steward who's likely had little exposure to tourists in net T-shirts and rubber thongs.

And when the Australians defend the cup in January (elimination races begin in October), they have the right to choose their "turf," which means the next America's Cup races will be held not in Newport, R.I., but in the waters off a small fishing village/artists' colony called Fremantle, located a few miles down the Swan River from Perth on Australia's remote western coast.

With its multitude of pubs, hodgepodge of architectural styles, and ethnic, bohemian and dockside "wharfy" population, Fremantle should be a lively, at times downright boisterous host for the races. An atmosphere more antithetical to the cool serenity of Newport can hardly be imagined.

Located in the state of Western Australia, 2,000 miles from Melbourne and 2,500 miles from Sydney, Perth and Fremantle are distant even for most Australians.

Bursting with pride at their audacious acquisition of the cup, Australians are eager to host America's Cup fans and are sparing nothing in their efforts to make it worth their while to travel thousands of miles to get there. Even without the new hotels and restaurants springing up, Perth and Fremantle have plenty to offer visitors.

Settled in 1829, both Perth and Fremantle are young even by Australian standards. Perth's miles of well-kept parks, shiny new buildings and energetic people, all washed in clear, brash sunlight, are reminiscent of Los Angeles before smog muted its landscape. Fremantle, with its lacy colonial houses and fantastical Victorian buildings being "smartened up" for America's Cup visitors, looks like Disneyland undergoing urban renewal.

Perth and Fremantle are almost exactly halfway around the globe from Washington -- about 35 hours of flight time and airport stops. Once you're in Sydney, the isolation of Perth becomes even more apparent with the realization that you still have to fly west another 5 1/2 hours. But it's this very isolation that makes it worth the effort.

Located 1,600 miles from Adelaide, the nearest large city, Perth is still the frontier, despite a few glossy new office buildings, hotel complexes and shopping arcades. Flanking these are banks of shops that still hang painted wooden signs outside their establishments almost in defiance of the big-city sophistication springing up around them.

As you'd expect in the frontier, people here are open, friendly, self-confident and outspoken with a touch of youthful arrogance to which they probably have a right: Western Australians haven't polluted their air and water and are committed to preserving the architecture of their short but colorful past. "We're Showing Australia How" was Western Australia Premier Brian Burke's reelection campaign slogan in 1986. He won in a landslide.

Perth is built around the estuary of the Swan River, 11 miles from where it flows into the Indian Ocean at the port of Fremantle. Bridges, ferries, docks, jetties and long picturesque drives along the river's shores are all part of city living here. To the west the narrow coastal plain gives way to the gentle hills of the Darling Range, actually an escarpment where parks and open space are interspersed with suburban communities and homes half hidden among the trees.

With a year-round average of eight hours of sunshine a day, and an average high of 73 degrees, Perth's winter is like summer in New England, and its summer is downright hot. What keeps both tempers and bodies from overheating is a benevolent afternoon breeze that Western Australians call the Fremantle Doctor. The Doctor, combined with ceiling fans and good cross ventilation, is most Western Australians' substitute for central air-conditioning -- except in first-class hotels and a few restaurants.

Perth's 980,000 inhabitants also beat the heat by spending a lot of time outdoors -- in the parks and on the trails of the Darling Range, at the beach or boating on the Swan River.

Walking through downtown Perth you'd think shopping was the city's main industry. Shopping arcades reach deep into each city block, except for the 1937 Tudor-style London Court done in "Miami Vice" pastels with lots of skylights, outdoor cafe's, shimmery mirrors and glowing plastic signs. The arcades are packed with people, as many strolling as actually buying.

Despite their obvious love of slick modern architecture, the people of Perth have retained several of their colonial buildings -- including the Cloisters, the Old Perth Boys' School and Government House on St. George's Terrace -- but the most interesting example of early architecture is His Majesty's Theatre at Hay and King streets. Here the docents will guide you through the fancy 1904 Italianate theater for as long as you can hold out. This unbureaucratic approach to tourism holds over to the Western Australian Museum, where there's no check room, but clerks in the gift shop will gladly keep your belongings under the counter while you tour unencumbered. Needless to say, hotel and restaurant service is extraordinary.

A trip to Australia without seeing the outback would be like a trip to Niagara without seeing the falls, and of course the Perth Zoo is no substitute, but the zoo does give a good preview of the outback's animals: ostriches and kangaroos in abundance, plus a good sampling of other Down Under fauna.

To see koalas, however, it's necessary to go to Yanchep, a public park and resort about an hour outside Perth. Here a grove of the marsupial's favorite variety of eucalyptus, which won't grow in Perth, provides the animals both abode and sustenance.

Possibly the best part of visiting the zoo is that you reach it by boat, crossing the beautiful, sprawling Swan River, which dominates the city's landscape. The Swan was originally a group of lakes that sometime in prehistory crept toward each other and then started flowing toward the sea, providing early settlers a route to the Indian Ocean at the port of Fremantle. Surrounded by parks, the Swan today is dotted with pleasure boats every day of the week, an indication of the enthusiasm the people of Perth have for boating, whether their own little day sailers or the mighty Australia II that brought them the America's Cup.

The park that offers the best view of the Swan is the 1,000-acre Kings Park on a hill overlooking both the river and the city itself. Kings Park has miles of bicycle paths through its gardens and acres of natural bushland, which in October and November -- Australia's spring -- are blanketed with wildflowers. Western Australia's spring wildflowers are as big a tourist draw among Australians as New England's fall foliage is to Americans.

From Kings Park you can continue along the rim of the city to the bluffs of "Millionaires' Row" and the home of Alan Bond, whose personal fortune made Australia II possible. Bond, a self-made millionaire, organized the syndicate that sponsors Australia II, and he has become a national hero because of it.

Once a humble sign painter in Perth, Bond's rags-to-riches past is the kind of success story Australians love. But don't get too comfortable with the idea that Australia is a model of egalitarianism with its self-made millionaires, convict ancestry and "open-door policy" for the America's Cup at the Royal Perth Yacht Club. A mile or two past Bond's buff-colored mansion is the Dalkeith Bowling Club, where on Wednesday mornings at 10:30 you'll see the manicured lawns dotted with women in identical white lawn bowling uniforms, all with hemlines a regulation height from the ground and wearing identical brimmed hats -- which may not be removed during play. In certain cultural pockets of Australia, the British Empire lives on.

For a change in cultural mood, a half-hour's drive from Millionaires' Row puts you in the Mediterranean-like fishing village of Fremantle, where the America's Cup contenders' 12-meter boats are docked alongside the fishing boats of the Greek, Italian and Portuguese fishermen who live here.

With accommodations in Fremantle limited, most visitors during the America's Cup races will stay in Perth (it's a half-hour drive or train ride away), but everyone should spend some time in this sleepy, yesteryear fishing village, startled into the 20th century by the rash of activity surrounding the races.

Although they will be packed with people for the America's Cup, neither Perth nor Fremantle has a long history as a sought-after address. In the early days of settlement, indentured laborers no sooner arrived at this remote outpost on the Indian Ocean than they started saving their money for the trip back. Some left for England; most could only make it as far as Sydney.

In desperate need of manual labor, the government brought in convicts from England, and Fremantle's residential streets still have lots of convict-built houses, with an occasional "fixer-upper" for sale. These two-story limestone structures are called "terraced houses" because of their long verandas embellished with wrought-iron fretwork carried from England as ballast on ships. Other convict buildings in Fremantle are museums: the Western Australian Maritime Museum, Fremantle Prison and Museum, the Fremantle Museum and Arts Center and the 1831 Round House.

Just before the turn of the century, while Fremantle was still struggling as a port, gold was discovered in Western Australia, the first real prosperity the state had known. Fancy Victorian buildings sprang up around Fremantle's town square as money from the gold fields came pouring in. These ornate buildings give a storybook look to Fremantle, except where merchants have put in modern stonefronts on the street level with painted wooden signs swinging from the cantilevered overhang. Fortunately, neon has yet to be discovered here.

The narrow, winding little streets that make Fremantle almost impossible to navigate by car make it a walker's delight. Around every corner there's a surprise -- a sidewalk cafe', a craftshop, a gallery or some building astonishing in the amount of colonial wrought-iron or Victorian bric-a-brac that embellish it. A typical block has the Chamber of Commerce, the trendy Firehouse Restaurant, a shop for nautical antiques and a tattoo parlor.

And on nearly every corner there's a pub. Most popular with tourists and sailors alike is the Sail and Anchor at Henderson and South Terrace streets, which employs two cellarmasters full time to keep their eight styles of homemade beer at optimum condition and temperature. The beers range from mild ale to the "dog bolter," which manager Steve Mildred warns "should be treated with a bit of caution." The 1854 building has been restored to turn-of-the-century Victorian fussiness -- tin ceilings, wainscoting, elaborate chandeliers and yards of polished bar.

"When we bought the place it had broken windows and drunks in the corners," says Mildred. "We kicked out the prostitutes and troublemakers and started making $3,500 a week."

Also at South Terrace and Henderson are Papa Luigi's, where you can eat pasta and gelati under sidewalk umbrellas with Fremantle's "trendies" (the Australian equivalent of our yuppies), and Tolgon's Pastry and Pie Shop, where you can buy pizza and meat pies. On the remaining corner of this intersection is the 1897 Fremantle Markets, open weekends, where you can buy vegetables and chickens or vintage clothes and flashy plastic jewelry.

"It was very unstylish through the 1940s and 1950s to say you were from Fremantle," says artist Helen Jones, "but now it's stylish to move back in." Jones sells her painted porcelain in the Bannister Street Workshops, where she shares space with other artists and craftsmen in a cluster of rustic little cubicles. These newcomers have taken the lead in renovating houses and storefronts, followed by business people who are trying to finish the job in an onslaught of carpentry and pastel paint before the visitors arrive.

"Greediest bloody capitalists you've ever come across in your life," says an otherwise gentle John Baron Gordon, who has a woodworking shop in the Bannister Street Workshops. "When they start making money we'll all have to move out."

Despite Gordon's fears, the spruced-up town is a beauty, and local residents determined to preserve their haven have the backing of the Western Australia Community Arts Board.

When walking through Fremantle's maze of irregularly plotted little streets, one thing is certain: You'll get lost. But then you'll most likely find yourself at the waterfront that wraps around Fremantle on three sides.

If you find yourself at the fishing-boat harbor, you'll see the America's Cup contenders lined up along the jetty as if they were all members of the same team instead of competing against each other. Some boats and their crews arrived as much as a year in advance of October's elimination races in order to practice in Fremantle waters.

Behind the chain-link fences are boat hoists, temporary office space, roaming security guards and lean, tanned young men and women in matching shorts and T-shirts, looking more like summer-camp counselors than a crack team of technicians and sailors involved in a multi-million-dollar competition. And there are the 12-meter sailboats themselves -- their masts, decks and rigging exposed for all the world to see.

But while everything above the water line is exposed, you'll never catch a glimpse of the boats' hulls. Since Australia II won in 1983 with its unorthodox winged keel, the mystery of speed at sea is assumed to lie in the design of a boat's keel. "Everyone will have a winged keel in 1987," predicts Australia II's Vern Reid. But no one knows for sure until the race begins.

For a good view of the races, most people will book a berth on a cruise ship or take day trips on an observation boat. The Achille Lauro will be in Australian waters for the America's Cup, and the luxury cruise ship Sea Goddess will be on hand, chartered by Australia's Westpac Bank, which is charging $250,000 a berth for the duration of the races.

But the man who will pay the most to see the races is probably Australia II syndicate organizer Alan Bond. He's built a high-rise hotel at Scarborough Beach called Observation City, where he'll have a good view -- of course -- and entertain his friends.

Perhaps the cheapest and most fun way to experience the event is to stay with an Australian family through Jean Smiley's Homestay program, booking day trips on observation boats to see the races.

If you're satisfied to watch the boats as competing specks on the horizon, you can choose a spot on Western Australia's miles of baches anywhere from Fremantle to Bond's Hotel in Scarborough Beach at no cost at all. You can even choose your company. At Cottesloe Beach you'll tan with the Australian elite in stylish bikinis; a bigger if not better tan can be had a little farther north at Swanbourne, the nude beach, or you can play in the surf with toddlers at North Beach, also known as Granny's Beach. Continuing north there are miles of solitary beaches for tanning, swimming or watching the sun set over the Indian Ocean with only the company you brought with you.

But without a doubt the most relaxing way to view the America's Cup races is from Rottnest Island, about 12 miles offshore from Fremantle. (There's ferry service from Fremantle and Perth, plus daily flights.) Even if Rottnest's beaches and craggy shores weren't as close to paradise on earth as anything in Australia, it would be worth the trip just to see the quokkas, foot-high marsupials that sit up on their haunches to beg food from bicyclers rolling along Rottnest's maze of bike paths. When Dutch explorers came upon the island in 1696 they mistook the quokkas for big rats and named the place "Rat's Nest."

Since cars are not allowed on Rottnest, you explore its beaches and rocky coast by bicycle, abandoning the faint at heart at the settlement near the boat landing to explore in glorious isolation. (There are small tour buses for those who can't bicycle.) Hills are high enough to give good vistas of the island's soft, green landscapes and crystal clear lagoons but low enough for easy riding. You can also get a fair view of the America's Cup course.

In fact, once established in one of Rottnest's campsites or hotels it would be easy to forget that you traveled halfway around the world to see the America's Cup races, rather than this island paradise. Equipped with binoculars and settled comfortably on a Rottnest knoll with a reasonable view of the America's Cup course, one could make a good case for staying put and cancelling those $250,000 Sea Goddess reservations, or putting in a call to "Bondy" saying you can't join him at Observation City after all.