What we don't understand about America

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As America prepares to celebrate its first Independence Day since 11 September, Harold Evans detects a new quest for moral purpose

You get a pretty good sense of the mood of America as it approaches its first Independence Day holiday since 11 September if you drop in to see Mr Deeds. He's the fellow who runs a little pizza place out in Mandrake Falls, Iowa, the one with the stars and stripes out front, always ready with a dollar for anyone in trouble, and a poem on the wall reading "Don't be blue, we'll see it through".

Mr Deeds is the film quietly taking America by storm with the highest takings at the US box office last weekend. It is a quasi-remake of Frank Capra's 1936 Oscar winner, Mr Deeds Goes to Town, starring Gary Cooper. The Mr Deeds of 2002 is the actor Adam Sandler. He is, as they say, no Gary Cooper, but the story line is similar - hick poet inherits fortune, comes to big city where greedy crooks and cynical hacks lie in wait.

Capra made his original film in the middle of the Great Depression and it reflected the populist yearning for the haves to help the have-nots. Today's version features a predatory CEO, who might have migrated from the front page of the Wall Street Journal, plotting to enrich himself by breaking up Deeds's company and putting 50,000 people out of work. Mr Deeds triumphs by shaming the ordinary stockholders into remembering their better nature before they got obsessed by short-term gain - and then goes back to Iowa.

I found Mr Deeds coarse and clunky, but it succeeds because of its lack of sophistication. I watched it in one of the most exclusive townships in the Hamptons, and even this audience of sophisticates lapped it up. Its hero symbolises the small-town virtues by which a besieged America hopes to restore faith in itself in new times of trouble and uncertainty. He brims with neighbourliness, hard work, native wit, honesty, generosity, candour and, above all, love of country.

There are no terrorists in the movie, but there don't need to be. Sandler perfectly reflects the superheated patriotic mood in the way he unhesitatingly whacks bad guys with a big fist to the jaw. All Americans know instinctively what that means these days.

This is what Europe fails to understand when it condemns America as small-minded and inward-looking on the one hand, bellicose on the other. As far as a lot of people in the European elites are concerned, the United States can never get it right. It's either too aggressive or not aggressive enough, too shy of engagement in international institutions or too keen to act against rogue states.

The view from here is very different. No institution in America - not the Presidency, not Church, not the Supreme Court - comes close in the public esteem these days to the military. Such is the anger over the business scandals, Wall Street is now ranked almost zero only a point or two ahead of Health Maintenance Organisations, the despised filters between patients and doctors.

But I sense another reason why Mr Deeds, then and now, is the American hero of choice. He is without pretension-but smarter than he appears to the cultural elite. He sees through their mockery of his good nature and exacts retribution. America feels exactly that way about the lofty disdain from Europe for its President and its efforts in taking on global terrorism.

It has its own reservations about Dubya, but it is proud of what it has endured and what it has achieved to free Afghanistan and it is hurt and resentful. "I hate being pontificated to by the Brits from their position of 'Strawberries at Centre Court' complacent invulnerability" is the way it was put to me by one leading historian of Anglo-American relations. In the same vein, the former defence and CIA chief, James Schlesinger Jr, won warm approval here for his rebuke that Americans do the heavy lifting in combat, while Europeans provide the critique, moralising from the sidelines.

Europe sees a braggart America throwing its weight around, arrogantly excluding itself from the jurisdiction of a world court. I read this differently. There is a real sense this Fourth of July that America would like nothing better than to retreat to Mandrake Falls and pull up the drawbridge.

It's all very well for Europe and other powers to lecture America on the need to restrain its power, but the US knows that it is always relied on as the last resort when things go seriously wrong. The two strains of assertive nationalism and isolationism are deeply intertwined in the American way. Europe should be wary of prodding the US into a shell of disengagement.

There is little conversation in California, Texas and Washington State about the topics that concern the chattering class of the north-east corridor. Peggy Noonan, the conservative commentator and speech-writer for the first President Bush, explains it as a lack of connection between what Americans know in their heads and feel in their guts when they get out of bed every morning. "We know something terrible may happen, but after noting it we move on - plan the barbecue, pick up the ribs, get the pool cleaned, worry about our weight. When someone comes on TV saying a dirty bomb could go off in Chicago tomorrow, we change the channel. We hope our government is on top of the problem. Knowing what we know of humans and governments, we doubt that is the case. We flip the burger, grab a beer, change the channel."

And that will be the mood at the bonfires and picnics and parades, all across America this Fourth of July. Americans know too well that they face the troubles of a giant capitalist and military power, at home and abroad. Last year at this time, 70 per cent polled thought the country was going in the right direction. This year it is 57 per cent - lower than at any point in several years with the exception of a poll two days after 11 September.

Peter G Peterson, the former Commerce Secretary, told me he regarded the scandals of Wall Street as a moral cancer of governance so destructive of international confidence as possibly to threaten a return to the Seventies (stagflation) if not Capra's Thirties (depression).

But I can't help feeling that it is never a good idea to underestimate American resilience. Peterson leads a group of blue-chip businessmen hell-bent on reform to restrain crooked management and corrupt outside experts and restore the primacy of the stakeholder. Both Longfellows would cheer that.

Capitalism is not only revered in America because it makes money, and that is something else many European Americaphobes don't understand. It is revered as a moral and a public good, and that is why Americans feel so betrayed when capitalism is distorted, as it has been in the recent scandals. As they remember their founding fathers this week, Americans know that they face huge tasks at home and abroad. They will stick with them until they win, because that is what Americans do.

? Harold Evans is the author of The American Century.