His tenure was marked by conflict with the Indiana Ku Klux Klan and Grand Dragon D. C. Stephenson, who grew the organization to be the largest voluntary association in the state by 1924.

McCray was convicted of mail fraud and resigned the governorship on April 30, 1924, days before the Republican primary election in which he was not a candidate.

He was formally nominated by the Democratic State Convention on a platform condemning the Klan's divisive tactics in targeting racial, ethnic, and religious minorities.

[5] Stephenson and the Klan worked tirelessly on behalf of the state and national Republican candidates, alleging that a Democratic victory would usher in a Catholic theocracy and the end of white supremacy.

Despite the mass defection of historically Republican Black voters, Jackson won the election, albeit with less than the majority for McCray in 1920, amidst a statewide sweep for the Klan's candidates.