During the American Civil War, he served as a senior officer of United States Volunteers and commanded cavalry in the Trans-Mississippi Theater.

He was viewed as a carpetbagger and implemented martial law in Arkansas for four months due to the rise of the Ku Klux Klan and violence against African-Americans and Republicans.

A U.S. Senate Joint Select Committee investigated him for claims made by his political rivals that he issued fraudulent election credentials during his time as governor.

[6] At the Battle of Helena in Arkansas on July 4, 1863, Clayton was in charge of the cavalry brigade on the right flank of the Union forces.

In August and September 1863, Clayton's regiment accompanied Major General Frederick Steele's troops in the campaign against Little Rock.

[2] In October 1863, Clayton commanded federal troops occupying Pine Bluff, Arkansas, using the Boone-Murphy House as his headquarters.

[7] During the Battle of Pine Bluff, he successfully repulsed a three-pronged Confederate attack of the forces of Brigadier General John S. Marmaduke.

During the battle, his troops piled cotton bales around the Jefferson County Courthouse and surrounding streets to make a barricade for the Union defenders.

[10] After the war, Clayton became a Companion of the First Class of the Missouri Commandery of the Military Order of the Loyal Legion of the United States.

He entered Arkansas politics due his belief that Unionists needed additional protection after several confrontations with ex-Rebels on his plantation.

[10] Most of the delegates to the 1868 constitutional convention were Republican since few Democrats could take the "ironclad oath" that they had not served in the Confederacy, or provided aid or comfort to the enemy.

[12] The ratification of the 1868 constitution, providing civil rights and the vote to freedmen, produced a furor among Democrats, who adhered to white supremacist beliefs.

[14] As governor, Clayton faced fierce opposition from the state's conservative political leaders and violence against blacks and members of the Republican party led by the Ku Klux Klan.

During this time Arkansas Republican Congressman James Hinds was attacked and killed while on his way to a political event,[15] and Clayton survived an attempt on his life.

An agent of Clayton was killed by a group of men led by Dandridge McRae and Jacob Frolich,[16] the leaders of the White County, Arkansas chapter of the Ku Klux Klan.

[17] Clayton responded aggressively to the emergence of the Klan in Arkansas by declaring martial law in fourteen counties for four months in late 1868 and early 1869.

This position garnered Clayton few friends at the state Republican party level and he faced repeated challenges to his leadership.

[2] In 1869, Lieutenant Governor James M. Johnson charged Clayton with corruption in the issuance of railroad bonds and misuse of power in his program to suppress violence.

[21] In January 1872, the U.S. Senate Joint Select Committee to Inquire into the Condition of the Late Insurrectionary States heard testimony raising questions about Clayton's behavior and integrity as governor.

The Arkansas Supreme Court ruled that the legal election had been held at the authorized polling places and that returns from the others were fraudulent.

As governor, Clayton discarded the returns from the fraudulent polling places and certified the candidate who won from the genuine votes.

In June 1872, after interviewing thirty-eight witnesses and generating five thousand pages of transcript, the committee issued a partial report indicating that the testimony appeared to not sustain the charges against Clayton.

[19] In February 1873, the committee issued its final report declaring that the testimony failed to sustain the charges against Clayton and that there was no evidence that he had any fraudulent intent in certifying the election of Edwards as directed by the state supreme court.

[23] As president of the Eureka Springs Improvement Company (ESIC), Clayton worked to develop commercial and residential structures, many which still exist.

[24] In 1883, Clayton became the president of the Eureka Springs Railway, which provided service to the resort community until 1889, when it was merged into what became the Missouri and North Arkansas Railroad.

[6] The now-defunct railroad line provided passenger and freight service from Joplin, Missouri, to Helena in Phillips County in eastern Arkansas.

William was appointed as the U.S. Attorney for the Western District of Arkansas and served as the chief prosecutor in the court of "hanging judge" Isaac C. Parker for 14 years.