When religious people use the word fear, especially in reference to God, it means several things. First, it means to revere or respect. It can also mean to be concerned of God's upcoming wrath.
The fear he notes in the country has to do with folks being afraid of the accusations. Good and moral people who had done nothing worth the life sentences they were receiving were being forced to accept a poor reputation or die.
I think this quote shows Hale's own worry about the accusations being made. I think it shows he cares about people sincerely. I think he wants to see justice work not just for the guilty but particularly the innocent. I also think he hopes he is not eventually condemned for his sincere faith.