It's not socialism itself that America was (or is) afraid of.... it's the people...
Leon Blum was elected Prime Minister of France in 1936. He was the Leader of the Popular Front, which was a coalition of socialists. Socialism was actually widely accepted, especially by the working classes in Europe. It wasn't accepted by the governments of Europe, however - Because it threatened their power... ~_^
The theories of socialist thinkers like Karl Marx were reevaluated many times, and misunderstood. The ideas may have worked if the theories were applied correctly. Lenin, for example, skipped over several parts of Marx's theory, and it ended up bringing chaos and poverty to Russia, rather that stability... And it also led to political power struggles, in which maniacs like Stalin come to power.
Therefore, Americans see the misrepresentation of socialism. I'm not a socialist, by any means, but I see where many working class peoole, who are struggling economically, would agree with the socialist views of private ownership in production... Especially in Europe in the early 1900's.
*sigh* I could go on and on... it's such an interesting topic! Thanks tsurara! ^_^