Excerpts from the text of President Reagan's speech last night:

The subject, . . . peace and national security, is . . . timely because I have reached a decision which offers a new hope for our children in the 21st century . . . and important because there is a very big decision that you must make for yourselves.

This subject involves the most basic duty that any president and any people share--the duty to protect and strengthen the peace . . . .

The defense policy of the United States is based on a simple premise: the United States does not start fights. We will never be an aggressor. We maintain our strength in order to deter and defend against aggression, to preserve freedom and peace.

Since the dawn of the atomic age, we have sought to reduce the risk of war by maintaining a strong deterrent and by seeking genuine arms control.

"Deterrence" means simply this: making sure any adversary who thinks about attacking the United States, or our allies, or our vital interests concludes that the risks to him outweigh any potential gains. Once he understands that, he won't attack.

We maintain the peace through our strength; weakness only invites aggression . . . . But what it takes to maintain deterrence has changed.

It took one kind of military force to deter an attack when we had far more nuclear weapons than any other power; it takes another kind now that the Soviets, for example, have enough accurate and powerful nuclear weapons to destroy virtually all of our missiles on the ground.

Now this is not to say the Soviet Union is planning to make war on us. Nor do I believe a war is inevitable . . . . But what must be recognized is that our security is based on being prepared to meet all threats . . . .

The United States introduced its last new intercontinental ballistic missile, the Minuteman III, in 1969, and we are now dismantling our even older Titan missiles . . . .Since 1969, the Soviet Union has built five new classes of ICBMs and upgraded these eight times . . . .

Over the same period, the Soviet Union built four new classes of submarine-launched ballistic missiles and over 60 new missile submarines. We built two new types of submarine missiles and actually withdrew 10 submarines from strategic missions.

The Soviet Union built over 200 new Backfire bombers, and their . . . Blackjack bomber is now under development. We haven't built a new long-range bomber in . . . about a quarter of a century . . . .

Despite what many people think, our strategic forces only cost about 15 percent of the defense budget.

. . . In 1978, the Soviets had 600 intermediate-range nuclear missiles based on land and were beginning to add the SS20--a new, highly accurate mobile missile, with three warheads. We had none. Since then, the Soviets have strengthened their lead.

By the end of 1979, when Soviet leader Leonid I. Brezhnev declared "a balance now exists," the Soviets had over 800 warheads. We still had none. A year ago this month, Mr. Brezhnev pledged a . . . freeze on SS20 deployment.

But by last August, their 800 warheads had become more than 1,200. We still had none. Some freeze. At this time, Soviet Defense Minister Dimitri Ustinov announced "approximate parity of forces continues to exist." But the Soviets are still adding an average of three new warheads a week, and now have 1,300.

These warheads can reach their targets in a matter of a few minutes. We still have none . . . .

Together with our NATO allies, we decided in 1979 to deploy new weapons, beginning this year, as a deterrent to their SS20s and as an incentive to the Soviet Union to meet us in serious arms control negotiations . . . .

We are willing to cancel our program if the Soviets will diamantle theirs. This is what we have called a zero-zero plan.

The Soviets are now at the negotiating table, and I think it's fair to say that without our planned deployments, they wouldn't be there.

. . . Since 1974, the United States has produced 3,050 tactical combat aircraft . . . the Soviet Union has produced twice as many . . . the United States has produced 27 attack submarines , while the Soviet Union has produced 61. For armored vehicles, including tanks, we have produced 11,200. The Soviet Union has produced 54,000 . . . we have produced 950 artillery and rocket launchers while the Soviets have produced more than 13,000 . . . .

Formerly we were able to offset superior Soviet numbers with higher quality. But today they are building weapons as sophisticated and modern as our own.

. . . The Soviets are spreading their military influence in ways that can directly challenge our vital interests and those of our allies.

The following aerial photographs, most of them secret until now, illustrate this point in a crucial area very close to home--Central America and the Caribbean Basin . . . .

This Soviet intelligence collection facility less than 100 miles from our coast is the largest of its kind in the world. The acres and acres of antennae fields and intelligence monitors are targeted on key U.S. military installations and sensitive activities.

The installation, in Lourdes, Cuba, is manned by 1,500 Soviet technicians, and the satellite ground station allows instant communications with Moscow. This 28-square-mile facility has grown by more than 60 percent in size and capability during the past decade.

In western Cuba, we see this military airfield and its complement of modern Soviet-built MiG23 aircraft. The Soviet Union uses this Cuban airfield for . . . long-range reconnaissance missions, and earlier this month two modern Soviet antisubmarine warfare aircraft began operating from it.

During the past two years, the level of Soviet arms exports to Cuba can only be compared to the levels reached during the Cuban missile crisis 20 years ago.

This third photo, which is the only one in this series that has been previously made public, shows Soviet military hardware that has made its way to Central America.

This airfield with its Mi8 helicopters, antiaircraft guns and protected fighter sites is one of a number of military facilities in Nicaragua which has received Soviet equipment funneled through Cuba and reflects the massive military buildup . . . in that country.

On the small island of Grenada, at the southern end of the Caribbean chain, the Cubans, with Soviet financing and backing, are . . . building an airfield with a 10,000-foot runway. Grenada doesn't even have an air force. Who is it intended for?

The Caribbean is a very important passageway for our international commerce and military lines of communication. More than half of all American oil imports now pass through . . . .

The rapid buildup of Grenada's military potential is unrelated to any conceivable threat to this island country of under 110,000 people and totally at odds with the pattern of other eastern Caribbean states, most of which are unarmed.

The Soviet-Cuban militarization of Grenada . . . can only be seen as power projection into . . . this important economic and strategic area in which we are trying to help the governments of El Salvador, Costa Rica, Honduras and others in their struggles for democracy against guerrillas supported through Cuba and Nicaragua.

. . . the Soviet Union is also supporting Cuban military forces in Angola and Ethiopia. They have bases in Ethiopia and South Yemen near the Persian Gulf oil fields.

They have taken over the port we built at Cam Ranh Bay in Vietnam, and now, for the first time in history, the Soviet navy is a force to be reckoned with in the South Pacific.

Some people may still ask: would the Soviets ever use their formidable military power? . . . can we afford to believe they won't?

There is Afghanistan, and in Poland, the Soviets denied the will of the people and, in so doing, demonstrated to the world how their military power could also be used to intimidate . . . . The Soviet Union is acquiring what can only be considered an offensive military force . . . .

Our NATO allies have assumed a great defense burden, including the military draft in most countries . . . . Our defensive strategy means we need military forces that can move very quickly . . . that are trained and ready to respond to any emergency.

Every item in our defense program . . . is intended . . . to keep the peace. Unfortunately, a decade of neglecting our military forces had called into question our ability to do that.

When I took office . . . I was appalled by what I found: American planes that could not fly and American ships that could not sail for lack of spare parts and trained personnel and insufficient fuel and ammunition for essential training.

The inevitable result . . . was poor morale in our armed forces, difficulty in recruiting the brightest . . . and difficulty in convincing our most experienced military personnel to stay on. There was a real question about how well we could meet a crisis.

And it was obvious that we had to begin a major modernization program . . . to move immediately to improve the basic readiness and staying power of our conventional forces . . . to make up for lost years of investment by moving forward with a long-term plan to prepare our forces to counter the military capabilities our adversaries were developing . . . .

I know that all of you want peace, and so do I . . . . Many of you seriously believe that a nuclear freeze would further the cause of peace. But a freeze now would make us less . . . secure and would raise . . . the risks of war.

It would be largely unverifiable and would seriously undercut our negotiations on arms reduction. It would reward the Soviets for their massive military buildup while preventing us from modernizing our . . . forces.

With their present margin of superiority, why should they agree to arms reductions knowing that we were prohibited from catching up?

. . . It wasn't pleasant for someone who had come to Washington determined to reduce government spending, but we had to move forward with the task of repairing our defenses or . . . lose our ability to deter conflict . . . .

We had to demonstrate to any adversary that aggression could not succeed and that the only real solution was substantial, equitable and effectively verifiable arms reduction--the kind we're working for . . . in Geneva.

. . . We are seeing some very encouraging results. Quality recruitment and retention are up . . . Our men and women in uniform at last are getting the tools and training they need . . . .

Ask around today, especially among our young people, and I think you'll find a whole new attitude toward serving their country. This reflects more than just better pay, equipment and leadership.

You . . . have sent a signal . . . that it is once again an honor to wear the uniform.

. . . It will take us longer to build the kind of equipment we need to keep peace in the future, but we've made a good start.

We have not built a new long-range bomber for 21 years. Now we're building the B1. We had not launched one new strategic submarine for 17 years. Now, we're building one Trident submarine a year.

Our land-based missiles are increasingly threatened by the many huge, new Soviet ICBMs. We are determining how to solve that problem.

At the same time, we are working in the START and INF negotiations, with the goal of achieving deep reductions in the strategic and intermediate nuclear arsenals of both sides.

We have also begun the long-needed modernization of our conventional forces. The Army is getting its first new tank in 20 years. The Air Force is modernizing. We are rebuilding our Navy, which shrank from about 1,000 in the late 1960s to 453 ships during the 1970s.

Our nation needs a superior Navy to support our military forces and vital interests overseas. We are now on the road to achieving a 600-ship Navy and increasing the amphibious capabilities of our Marines . . . .

And we are building a real capability to assist our friends in the vitally important Indian Ocean and Persian Gulf region.

This . . . major effort . . . is not cheap . . . . It comes at a time when there are many other pressures on our budget and when the American people have already had to make major sacrifices during the recession.

But we must not be misled by those who would make defense . . . the scapegoat of the federal budget . . . . In the past few decades, we have seen a dramatic shift in how we spend the taxpayer's dollar.

In 1955, payments to individuals took up only about 20 percent of the federal budget. For nearly three decades, these payments steadily increased and this year will account for 49 percent of the budget.

By contrast, in 1955, defense took up more than half of the federal budget. By 1980, this spending had fallen to a low of 23 percent. Even with the increase I am requesting this year, defense will still amount to only 28 percent of the budget.

The calls for cutting back the defense budget come in nice simple arithmetic . . . the same kind of talk that led the democracies to neglect their defenses in the 1930s and invited the tragedy of World War II. We must not let that grim chapter of history repeat itself through apathy or neglect.

This is why I am speaking . . . to urge you to tell your senators and congressman that you know we must continue to restore our military strength. If we stop in midstream, we will send a signal of decline, of lessened will, to friends and adversaries alike.

Free people must voluntarily, through open debate and democratic means, meet the challenge that totalitarians pose by compulsion.

It is up to us . . . to choose . . . between the hard but necessary task of preserving peace and freedom and the temptation to ignore our duty and blindly hope for the best while the enemies of freedom grow stronger day by day.

The solution is well within our grasp. But to reach it, there is simply no alternative but to continue . . . in this budget to provide the resources we need to preserve the peace and guarantee our freedom.

. . . My predecessors . . . have appeared before you on other occasions to describe the threat posed by Soviet power and have proposed steps to address that threat. But since the advent of nuclear weapons, those steps have been increasingly directed toward deterrence of aggression through the promise of retaliation.

This approach to stability through offensive threat has . . . succeeded in preventing nuclear war for more than three decades.

In recent months, however, my advisers, including in particular the Joint Chiefs of Staff, have underscored the necessity to break out of a future that relies solely on offensive retaliation for our security.

. . . I have become more and more deeply convinced that the human spirit must be capable of rising above dealing with other nations and human beings by threatening their existence.

. . . I believe we must thoroughly examine every opportunity for reducing tensions and for introducing greater stability into the strategic calculus on both sides.

One of the most important contributions we can make is . . . to lower the level of all arms, and particularly nuclear arms. We are engaged . . . in several negotiations with the Soviet Union to bring about a mutual reduction of weapons.

I will report to you a week from tomorrow my thoughts on that score. But . . . I am totally committed to this course.

If the Soviet Union will join with us in our effort to achieve major arms reduction, we will have succeeded in stabilizing the nuclear balance. Nevertheless, it will still be necessary to rely on the specter of retaliation-- . . . and that is a sad commentary on the human condition.

Would it not be better to save lives than to avenge them? Are we not capable of demonstrating our peaceful intentions by applying all our abilities and our ingenuity to achieving a truly lasting stability?

I think we are--indeed, we must!

After careful consultation with my advisers . . . I believe there is a way. Let me share with you a vision of the future which offers hope.

It is that we embark on a program to counter the awesome Soviet missile threat with measures that are defensive.

Let us turn to the very strengths in technology that spawned our great industrial base and have given us the quality of life we enjoy today.

What if free people could live secure in the knowledge that their security did not rest upon the threat of instant U.S. retaliation to deter a Soviet attack, that we could intercept and destroy strategic ballistic missiles before they reached our own soil or that of our allies?

I know this is a formidable technical task, one that may not be accomplished before the end of this century. Yet, current technology has attained a level of sophistication where it is reasonable for us to begin this effort. It will take years, probably decades, of effort on many fronts.

There will be failures and setbacks just as there will be successes and breakthroughs. And . . . we must remain constant in preserving the nuclear deterrent and maintaining a solid capability for flexible response.

But is it not worth every investment necessary to free the world from the threat of nuclear war? We know it is!

. . . We will continue to pursue real reductions in nuclear arms, negotiating from . . . strength that can be ensured only by modernizing our strategic forces.

. . . We must take steps to reduce the risk of a conventional military conflict escalating to nuclear war by improving our non-nuclear capabilities.

America does possess . . . technologies to attain very significant improvements in the effectiveness of our conventional, non-nuclear forces. Proceeding boldly with these new technologies, we can significantly reduce any incentive that the Soviet Union may have to threaten attack against the United States or its allies.

As we pursue our goal of defensive technologies, we recognize that our allies rely upon our strategic offensive power to deter attacks . . . . Their vital interests and ours are inextricably linked . . . .

And no change in technology can or will alter that reality. We must and shall continue to honor our commitments.

I clearly recognize that defensive systems have limitations . . . . If paired with offensive systems, they can be viewed as fostering an aggressive policy, and no one wants that.

But with these considerations firmly in mind, I call upon the scientific community in our country who gave us nuclear weapons to turn their great talents to the cause of mankind and world peace, to give us the means of rendering these nuclear weapons impotent and obsolete.

Tonight, consistent with our obligations under the ABM antiballistic missile treaty and recognizing the need for close consultation with our allies, I am . . . directing a comprehensive and intensive effort to define a long-term research and development program to begin to achieve our ultimate goal of eliminating the threat posed by strategic nuclear missiles.

This could pave the way for arms control measures to eliminate the weapons themselves.

We seek neither military superiority nor political advantage. Our only purpose, one all people share, is to search for ways to reduce the danger of nuclear war.

. . . Tonight, we are launching an effort which holds the promise of changing the course of human history. There will be risks, and results take time. I believe we can do it. As we cross this threshold, I ask for your prayers and your support.