There is an old saying in Brazil that says, ``The United States is a very big country, but Brazil is colossal.'' Flying for hours in a jet aircraft gives one a sense of just how colossal Brazil is. In fact, the only thing larger than Brazil is the heart and good will of the Brazilian people. You, Mr. President, and all Brazilians have said bem vindo -- welcome. And we do feel welcome and at home.

I'm told that 77 years ago the Baron of Rio Branco, that great Brazilian diplomat, in referring to the arrival of one of Secretary Shultz' predecessors, Elihu Root, is supposed to have said, ``His eyes may not be dazzled by our small material progress, but his American philosophy will surely be pleased to note the new phenomena in the Brazilian nation: activity, energy, and hope.'' Well, I can assure you that my American philosophy is still very much in tune with Brazil's phenomenal activity, energy, and hope. I must also admit that my eyes are dazzled by the progress of the Brazilian nation.

Clearly, the postwar period, the time when relationships were still determined by the monumental events of the Second World War, is over. Old patterns are giving way to new relationships. Economic and political power once concentrated in the hands of a few is being spread, as it should, among many nations. This is a result not of redistribution, but the creation of vast new wealth, generated by modern technology, creative enterprise, and hard work.

President Figueiredo, you capsulized it well at the United Nations when you said, ``The extraordinary release of productive forces on a worldwide scale in the postwar period wrought within a few decades the intricate patterns of a different world, a complex and unstable world, but also a diversified and promising one.'' Well, Mr. President, I was very much impressed by the depth of analysis and the strength of conviction of your speech at the United Nations.

Today, Mr. President, I renew my pledge to maintain with you the closest of consultation. Friendship does not mean total agreement; instead it suggests shared values, ideals, mutual respect, and trust. And this is certainly true of the Brazilian and American peoples. I know, Mr. President, it is true of you and me as individuals. Our countries, as friends, and we, as leaders of these great nations, will work together to overcome the challenges we face to our prosperity and freedom.

Recently, our economies have been hard hit by recession, something experienced in most of the world. In the United States, as you're doing here in Brazil, we're taking the painful steps necessary to overcome the economic crisis that threatens our people.

Self-discipline is necessary; so, too, is mutual accommodation. Borrowers must move to restrict their deficits. But it is just as important that lenders not withhold new funds from countries which adopt effective stabilization plans. Lenders and borrowers must remember that each has an enormous stake in the other's success.

Similarly, the integrity of the world trading system must be preserved, so it can serve once again as the great engine of growth. Closed markets must be carefully opened. Open markets must be shielded from protectionism. Our challenge is to make our trading and financial relationships remain a source of prosperity and strength -- not become a source of discord and disagreement.

Toward that end, we believe that economic relationships among the trading nations of the world must rest on three main pillars. First, a spirit of cooperation. Our economies are so clearly intertwined that our best hope for growth is to act in concert and not in isolation. Nothing is more destructive than unilateral decisions by individual countries to cut back trade or financial flows. We cannot prescribe what the private sector should do. But our aim should be government and private relations that can be relied upon. Second, a spirit of fairness. In today's climate there is a powerful temptation for countries to take action at the expense of their neighbors. We've seen in the past the damage that can do. Finally, there must be a spirit of commitment -- commitment to stable economic growth shared by nations around the globe.

The debt problems facing many nations today are imposing, and we must act together to ensure that we have the tools to deal with them. The resources of the International Monetary Fund are one of the most important of these tools. To assure the adequacy of the IMF resources, the United States has proposed that in addition to an increase in the IMF quotas, there should also be a special borrowing arrangement to meet the demands that may be placed on the IMF. Where countries need assistance as they seek IMF funding, those able to do so must act to provide bridging funds.

We also need trading rules that reflect the enormous changes in world trade that have occurred since GATT was established 35 years ago. The meeting which has just ended in Geneva was a useful step along that road, but we still have a long way to go.

Many countries will need to pass through a painful period while making necessary adjustments in the years ahead, and we must work closely together during this transition. We will work with you to help the international system evolve so as to bring a brighter economic day to all our people.

At times it's too easy to be lured into the trap of seeing only the problems, pitfalls, and vulnerabilities of the journey. This is especially true in a period of economic crisis. President Figueiredo, the United States is overcoming its crisis, and I want you and all Brazilians to know that we're confident that Brazil will surmount its current difficulties.

There's an old saying here that ``Nothing stops Brazil.'' Well, Mr. President, nothing will stop Brazil. We're confident, because we know the character of your people. Our citizens came from the same mold. We are nations of immigrants. Our national soul was honed on the frontier, by people with the courage to leave the familiar and face the unknown. This is the heritage of your land and mine.

The people who came here wanted to better their lives and the lives of their children. The frontier of the New World didn't offer streets paved with gold. It offered opportunity and the spirit of freedom. Today, freedom-loving people around the world are tremendously encouraged by your stable transition back to democracy.

History proves that the freer a people become, the more their creative energies are unleashed. You touched on this last year when you outlined your commitment to representative government. ``Democracy,'' you said ``is none other than a system in which every individual has the chance to play a highly responsible and active role on the stage of national politics, rather than the role of a mere passive spectator.''

Last month about 50 million of your countrymen became political activists instead of spectators. Your legislative and gubernatorial elections demonstrated the vigor and vitality of the democratic ideal in this hemisphere. We salute you, President Figueiredo, for your strong leadership in opening this new frontier -- or chapter, I should say, in your country's history, and we salute your fellow countrymen as well. From all accounts, your elections were much more than political contests; they were a celebration of freedom.

What we strive for is a hemisphere where the future is determined not by bullets, but by ballots -- a hemisphere of countries at peace with themselves, and one another, and at peace with the world.

The peace we've known has been a precious asset for the Americas. Instead of allocating a great share of their resources on military spending, the developing countries of this hemisphere have invested in the future. And this has been no accident. From the Pan American Union to the Treaty of Rio de Janeiro and the Organization of American States, this hemisphere has been in the forefront of multilateral, international cooperation. No other region in the world can match our record.

Mr. President, I cannot forget that when last we met the hemisphere faced a crisis in the South Atlantic, and your country was a voice of moderation and reason. We both found to be unacceptable the first use of military force to resolve that dispute. Underlining our support of this principle, the United States recently joined with Brazil and other countries of the hemisphere in calling upon Great Britain and Argentina to negotiate their differences.

As your speech before the United Nations suggested, Brazil's concern for peace extends far beyond this hemisphere, especially in an age when the weapons of destruction threaten all mankind. Let me assure you tonight, and all of our friends in this hemisphere, the United States is absolutely determined to maintain peace and bring the nuclear arms race under control. Here again our hemisphere has an exemplary record through the nuclear-free zones defined by the 1967 treaty of Tlatelolco, we have already demonstrated the kind of progress that can be achieved in this vital area of arms control.

Brazil can take great pride that it's a country with a long border touching more nations than any other in this hemisphere, and yet you remain at peace with your neighbors. This is a gift from a former generation of Brazilians, such as the Baron of Rio Branco, who, with vision, hard work, and a spirit of fairness and compromise, resolved difficult problems. Together, we should strive to pass on that same gift to future generations in our hemisphere.

But just as threatening as conventional armies or nuclear weapons are counterfeit revolutionaries who undermine legitimate governments and destroy sources of economic progress; insurgents who are, at great expense, armed by the surrogate of a faraway power; a power that espouses a philosophy alien to the Americas, whose goal is the destabilization of our governments and our economies. This is aggression, pure and simple.

When President Dwight Eisenhower visited this city in 1960, even before it was consecrated as your capital, he stressed the commitment of the United States to the charter of the Organization of American States and the Mutual Assistance Treaty of Rio de Janeiro. Today I reaffirm that commitment and that pledge. We stand firmly with the other responsible nations of the Americas in opposing those who with violence and force of arms try to undermine economic progress and political stability.

The government among the American States, of course, is as much moral as it is legal. A great Brazilian statesman, Joaquim Nabuco, understood this when, at the turn of the century, he noted: ``Our alliance is . . . a completely peaceful one, which shines outside of the American orbit only to let the rest of the world know that it can be called the hemisphere of peace.'' Those words reflect the goal of the United States, a hemisphere of peace.

Tonight, I want to share with you a dream I have about the Americas. Joaquim Nabuco must have had a similar dream when he called for us to be the vanguard of civilization. It's a vision of two great land masses rich in opportunity and resources, populated by people from every part of the world, every race and background, living together, trading together in peace and freedom, people who share a desire for liberty and a respect for the rights of others, a people who know that with ingenuity and enterprise no obstacle is too great, people who share a belief in those fundamental values of God, family, and justice that give meaning to our existence.

What is so remarkable is that this dream is within the grasp of this generation. We have a hemisphere composed of 600 million hardy souls. We have the resources and the know-how. Just as important, we have a wellspring of good will between us that waits to be tapped. With faith, commitment, common sense, and strength of character, we can meet the challenges to our peace and prosperity.

No one should be disheartened by the dark night of problems that surround us. There's a beautiful sunrise coming, and when it does, as Nabuco said, we can shine as an example to the rest of the world. We can and will be a hemisphere of peace, of prosperity, and of freedom.

On a personal note, Mr. President, I was deeply moved not only by the unique gesture you made today in offering the Granjo for a delightful lunch and meeting but also the warmth and hospitality that you've shown to me and my Cabinet officers.

President Figueiredo, all of you, it has been an honor to be with you this evening. Please accept on behalf of the American people our warmest wishes of friendship, admiration, and respect.

And now, would you join me in a toast to President Figueiredo, to the people of Bolivia [Bogota]\1\ (FOOTNOTE) -- that's where I'm going -- to the people of Brazil, and to the dream of democracy and peace here in the Western Hemisphere.

(FOOTNOTE) \1\White House correction.

Note: The President spoke at 9:50 p.m. in response to a toast proposed by President Figueiredo. The dinner was held at the Palacio do Itamaraty.

Following the dinner, President Reagan returned to the Palacio da Alvorada, where he remained overnight.