U.S. President George W. Bush gives a speech Thursday on the financial markets at Federal Hall in New York, ahead of a Group of 20 leaders' summit that he will host in Washington on the weekend. (Gerald Herbert/Associated Press)

President George W. Bush said Thursday the U.S. will emphasize the need for a free-market system, continued investment and increased trade when he hosts a Group of 20 leaders' summit this weekend that will explore ways to reform financial markets.

"While reforms in the financial sector are essential, the long-term solution to today's problems is sustained economic growth, and the surest path to that growth is free markets and free people," Bush said during a speech in New York on Thursday afternoon.

He made his comments at the venerable Federal Hall on Wall Street, which was Congress's first home and within shouting distance of the New York Stock Exchange. Earlier, Bush addressed a United Nations conference on religious tolerance and met with King Abdullah of Saudi Arabia.

As he has done in recent weeks, Bush again emphasized the U.S. will focus on the importance of freer markets and increased trade and investments at the summit on the global financial crisis, which the White House is hosting and begins Saturday.

Leaders at the summit, which will also include officials from the World Bank and the International Monetary Fund, are expected to discuss the underlying causes of the global financial crisis, review the progress that has been made by various nations and start to develop policies to reform the financial markets.

'It should be smarter government'

Bush said the "aim should not be more government. It should be smarter government."

He said this was "a decisive moment for the global economy." In the wake of the financial crisis, critics from the left and the right have equated the free-enterprise system with greed, exploitation and failure, he said.

While he conceded borrowers, lenders and governments were to blame, "the crisis wasn't a failure of the free-market system." The answer will be to implement the reforms and move forward with a free market, he added.

"Like any other system, capitalism is not perfect," he said. "It can be subject to excesses and abuse, but it's the most just way of structuring an economy."

He also said that maintaining free movement of goods and services between countries was just as important as maintaining free markets. He said leaders should keep in mind the protectionist measure Congress passed in 1930 during the Depression that led to economic ruin in the U.S. The Smoot-Hawley Tariff Act led to increased duties on tens of thousands of imported goods that resulted in severe reductions in trade between the U.S. and Europe.

Last month, the U.S. passed a $700-billion US financial bailout intended to buy bad assets from banks. Treasury Secretary Henry Paulson said Wednesday that it won't do that, hoping instead to buy stakes in banks and encourage them to resume more normal lending.

In Europe, some governments have said they will purchase equity in banks and provide government loan guarantees. In recent days, Japan and China announced economic stimulus packages to help jump start their weakening economies.

The G20 summit will be one of a series of meetings to address the financial crisis, Bush said.