But the magnificence of Portugal is not merely found in the grandeur of landscape and scenery. Overriding the loveliness we see the sculpture of your land as the soul and spirit of the Portuguese people. Mr. Prime Minister, we Americans take great pride in our frontier heritage and in our love of liberty. And when it comes to pushing back frontiers and to the commitment to human freedom, our two peoples are as one family.

Five centuries ago, the Portuguese were the pathfinders who led the way to a new era in the history of mankind. Like Americans, seeking new horizons is so much a part of your national character.

Portugal's many experiences or achievements during the Age of Discovery are a great source of pride. Today you have equal reason to be proud of what you've overcome in order to ensure that future generations will continue to enjoy the fruits of democracy and freedom. It has taken enormous energy and commitment. With courage and tenacity you cast off the chains of a dictatorship, defeated those who would have subverted your cause, and have built a government based on the popular vote and a respect for human rights.

I'm pleased to have this opportunity to salute your personal courage and leadership, Mr. Prime Minister, and to applaud what you and the people of Portugal have accomplished together. I also want to extend my thanks for Portugal's continuing contribution to the Western alliance. This is even more meaningful now that you have proudly joined the ranks of the democratic nations.

The ever-more apparent failure of communism, wherever it has been tried, makes it increasingly important for the free people of the world to stand together. John Dos Passos, an American writer who, like so many of our fellow citizens, had family roots in Portugal, wrote late in his life: ``Marxism has not only failed to promote human freedom. It has failed to produce food.''

History is on the side of the free because freedom is right and because freedom works. Only in democratic countries is the individual free to create and dream without fear; to profit from the product of one's labor on investment or investment; to organize unions and cooperative efforts with like minded peoples; to peacefully try to change what is into something totally new and different.

Under freedom, innovation and ideas are unleashed that otherwise would be smothered by oppression and control. Free people are not afraid of change. In market economies, change becomes a means of creating new wealth by meeting the needs and wants of others and by doing it cheaper and better.

Mr. Prime Minister, we're aware of the economic challenges that you face. It wasn't that long ago when we in the United States found ourselves with similar economic difficulties. We decided to shun regulatory and redistribution schemes and, instead, put in place incentives for our people to work and produce and invest, freeing our economy to grow. Evey country must find its own way, but I would hope that our experience and the success that we've enjoyed might provide encouragement for others.

We want Portugal to succeed and your people to prosper. A recent investment mission here by American firms was sponsored by our two governments. This is the type of private sector activity which serves the interests of both our peoples.

Our cooperation in educational endeavors, as we're doing in the Fulbright Program, will also reap many rewards in the future. Let us see to it that these positive steps are only the first of many. The recent establishment of the Luso-American Foundation bodes well for the relations between our governments and our peoples.

Today we are laying the foundation for the progress and freedom our children will enjoy. What we do today is for them tomorrow. They'll stand on our shoulders, and we must give them strong backs so they may see well into the future. And it will be people like you, Mr. Prime Minister, to whom future generations will be most grateful. You can be especially proud of your strong leadership in bringing democracy to Portugal.

So, all, please join me in a toast to Prime Minister Soares and the Portuguese people, building a future of freedom and progress.

Note: The President spoke at 3:14 p.m. at Sintra Palace. He spoke in response to a toast by Prime Minister Soares. Following his remarks, the President returned to Queluz Palace, where he stayed during his visit to Portugal.