IN 1928 Winston Churchill visited Balmoral and saw the two-year-old Princess Elizabeth for the first time. He wrote to his wife: "She is a character. She has an air of authority and reflectiveness astonishing in an infant." A year or so later, Sir Owen Morshead told of an incident at Windsor. The officer commanding the guard strode across to where the pram stood and said: "Permission to march off, please, Ma'am?" There was the inclination of a bonneted head and a wave from a tiny hand.

The Queen has often deployed her ready wit, especially to defuse embarrassing occasions. Once when she was in a tea shop near Sandringham, a woman leaned forward and said: "Excuse me, but you do look awfully like the Queen". The Queen replied: "How very reassuring." Again, at a banquet, she was served with asparagus and her neighbour at the table watched her to see how she would deal with the stout, buttery stems. When he came to be served, the Queen turned to him and said: "Good. Now it's my turn to see you make a pig of yourself!"

Much later at a public ceremony Mrs Thatcher felt embarrassed because she'd turned up in an outfit which closely resembled the Queen's. Afterwards, Downing Street discreetly asked the Palace whether there was any way by which the Prime Minister might know in advance what Her Majesty intended to wear. The palace phoned back with a message directly from the Queen: "Do not worry. The Queen does not notice what other people are wearing."

But now, a New Labour think tank - surely an oxymoron? - says that a useful role for the monarchy would be to travel round the world apologising for the sins of the empire. They say future monarchs should be educated at comprehensive schools. And even their grudging support for the retention of a little royal ceremonial is only out of the pig philosophy that says it's good for the tourist industry.

Some will say that, in the modern world, the Queen does not rule. They are mistaken. The Queen rules through her ministers just as the ministers govern through their civil servants. Of course, the minister does not attend to every small item of business. It is his job to secure the coherence of his department. It is the Queen's function to secure the coherence of the realm.

Having defaced and deformed institutions such as parliament, the church, the law and the university, the modernisers recently turned their destructive spite on the monarchy which too will have to be modernised.

We know not what we do: for the monarchy is the living symbol of the nation. We need to value something. And what you value shows you what you're worth. People will revere something: better a thousand-year-old monarchy than Posh Spice, Beckham and Kylie. The marvellous tide of respect shown by the people following the death of the Queen Mother has demonstrated vigorously that the majority in Britain still prefer Rule Britannia to Cool Britannia.

l Peter Mullen is Rector of St Michael's, Cornhill, in the City of London, and Chaplain to the Stock Exchange.