President and Mrs. Reagan, your presence gives me and, indeed, many of our guests a chance to repay as best we can the hospitality you bestowed on us when we were your first official guests from abroad at the beginning of your Presidential term of office. I realize, of course, that you've both become accustomed recently to taking your meals in rather grander places -- [laughter] -- the Palace of Versailles and Windsor Castle. As you can see, this is a very simple house, one which has witnessed the shaping of our shared history since it first became the abode of Prime Ministers in 1732.

Mr. President, some of us were present this morning to hear your magnificent speech to members of both Houses of Parliament in the historic setting of the Royal Gallery. It was, if I may say so, respectfully, a triumph. We are so grateful to you for putting freedom on the offensive, which is where it should be. You wrote a new chapter in our history -- no longer on the defensive but on the offensive. It was, if I might say so, an exceedingly hard act to follow. [Laughter] But I will try to be brief.

Much has been said and written over the years, Mr. President, about the relations between our two countries. And there's no need for me to add to the generalities on the subject today, because we've had before our eyes in recent weeks the most concrete expression of what, in practice, our friendship means. I refer to your awareness of our readiness to resist aggression in the Falklands even at great sacrifice and to our awareness of your readiness to give support to us even at considerable costs to American interests.

It is this preparedness on both sides for sacrifices in the common interest and, indeed, in the wider interest that characterizes our partnership. And I should like to pay tribute to you, Mr. President, and to you, Mr. Secretary Haig, whom I also greet here heartily today, and through you to the American people for your predictably generous response.

Believe me, Mr. President, we don't take it for granted. We are grateful from the depth of our national being for your tremendous efforts in our support.

Mr. President, your mission to London and to other capitals of Europe is a remarkable one, and we are fully conscious both of its symbolism and of its substance.

From the day you took office, you were determined to breathe new life into the Alliance. One of your predecessors, also much loved in this, our country, President Eisenhower, put it so well when he said, ``One truth must rule all we think and all we do. The unity of all who dwell in freedom is their only sure defense.''

You recognized how central your allies were to American interests, and vice versa. But no country, however strong, can remain an island in the modern world. And I want you to know how fully we reciprocate your conviction about the need for a dynamic, two-way alliance.

We here also realize, Mr. President, what you have done, both to increase immediate American military strength and to reanimate talks on arms reductions, objectives that must go hand in hand. You've seized the initiative in East-West relations, and as seen by us in Western Europe, that is already a considerable achievement.

May I also stress what you stand for in international economic life, your commitment to an open world trade system, whatever the immediate pressures for restriction. That is our role, too, and we will strive for it alongside you.

Mr. President, both before and since you took office, I've come to know you as a personal friend who can be relied on in times of danger, who's not going to compromise on the values of the free world, who seeks the reduction of world tensions and the strengthening of world security, who will do everything possible to encourage creative enterprise and initiative, who wants the individual to flourish in freedom, in justice, and in peace.

But I've found in my 3 years in office, as I'm sure my predecessors did -- and we're delighted to see some of them here today -- that there is one further characteristic that is dominant to those concerned with policy. I refer to our ability to discuss with you problems of common interest -- which means in today's world practically everything -- to discuss them freely and candidly, not necessarily always agreeing, but giving and taking advice as family friends, without exciting anxiety or envy.

You, Mr. President, and you, Mr. Haig, have always shown this spirit. It's something unique between us and is of priceless value to the cause we both share.

You, Mr. President, this morning, quoted our greatest statesman of this century, Winston Churchill. You well know that in Parliament Square, as well as Winston Churchill, there stands the statue of Abraham Lincoln who, in his most famous speech of all at Gettysburg -- and I was very worried this morning when the Chancellor, too, quoted Gettysburg. And I thought, ``Has he trumped my ace again!'' [Laughter] But you know we all adore the Lord Chancellor who, in his own inimitable way, put everything we felt so much.

But you know that speech at Gettysburg -- every sentence is a quote. He gave one of them. May I say another of them which, I believe, fits in with the cause which you and I share. You'll remember that Abraham Lincoln, on that famous occasion, said: The world will little note nor long remember what we say here, but it can never forget what they did here. It is for us the living to be dedicated here to the unfinished work that they who fought here have thus far so nobly advanced.

It is in that spirit and mindful of that unfinished work, that I ask you all to rise and drink a toast to the enduring alliance between the United States and the United Kingdom, coupled with the names of the President and Mrs. Reagan. The alliance, the President, and Mrs. Reagan: to your health, success, and happiness.

The President. Well, Madam Prime Minister, it's a pleasure to meet again with such a respected and trusted friend. Nancy and I are honored to be your guests and guests of the British people. Our friendship began in this great city just before you took office. Then, as now, I enjoyed the visit very much. ``When a man is tired of London,'' Samuel Johnson said, ``he is tired of life. For there is in London all that life can afford.'' Well, he was right. I'm very glad to be alive, and I love London. [Laughter] It's great to be back.

When you were our guests in Washington last year, Madam Prime Minister, you said you had come across the Atlantic with a message. ``Britain,'' you said, ``stands with America. When America looks for friends, Britain will be there.'' Well, your words touched the hearts of our people. We were very grateful. So let me tell you that we, too, have crossed the ocean with a message: America stands with Britain, and I mean that.

The Prime Minister. I know that.

The President. These are difficult days for both our peoples. We're gripped by recession, concerned about aggression and instability in the world. No longer can we rest on comfortable assumptions about our economies or our security. Together and independently, our two countries have acted to renew and protect our way of life. We're restoring incentives and opportunities in our marketplaces by reducing excessive taxation and regulation. By lifting the heavy hand of government, we're placing our faith in the working men and women of Britain and the United States.

Our two countries have been united in commitment to free trade, and we are both making economic sacrifices for the sake of Western security. But an important challenge still looms before us: the protection of our personal freedoms and national interests in the face of hostile ideologies and enormous military threats. We must find the right balance of deterrent forces and arms reductions to secure a lasting peace for generations to come.

The United Kingdom is a great symbol of Western thought and values. The British people are known for their vision and dedication. Yours has been an empire of ideas, nourishing freedom and creating wealth around the globe. Here is, as I said earlier today, the birthplace of representative government, constitutional rights, and economic freedom -- a body of ideas that has raised the standard of living and improved the quality of life for more people in less time than any that ever came before.

Your leadership, Madam Prime Minister, has also been far-seeing and courageous, returning your country and your people to the roots of their strength. You remind me of something one of our wiser Americans, the late Will Rogers, once said about the paradox of being a great leader. He said, ``The fellow that can only see a week ahead is always the popular fellow for he's looking with the crowd. The great leader, the true leader, has a telescope. His biggest problem is getting people to believe he has it.'' [Laughter]

But you have a telescope and your focus is true. You also have the eloquence and the determination necessary to lead, and your people have the wisdom and the tenacity to persevere. We Americans believe this combination promises great things for not only Great Britain but for the world.

Nancy and I thank you for this warm reception among friends. I would like to propose a toast and, again, similar in that it's to the bonds between our people, but also to the Right Honorable Margaret Thatcher, Prime Minister of the United Kingdom, and Mr. Thatcher, and to the Queen. To the Queen.

Note: Prime Minister Thatcher spoke at 2:25 p.m. at Number 10 Downing Street, her London residence.

Following the luncheon, the President returned to Windsor Castle.