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Like other agents, Stephenson got to keep a portion of the entrance fees, and began to amass wealth.

His vile behavior caused a sharp drop in Klan membership, which decreased further with his exposure to the press of secret deals and the Klan's bribery of public officials.

By 1925 over half the elected members of the Indiana General Assembly, the Governor of Indiana, and many other high-ranking officials in local and state government were members of the Klan.

Politicians had also learned they needed Klan endorsement to win office.

In Indiana, the Klan generally did not practice overt violence but used intimidation in certain cases, whereas nationally the organization practiced political acts against minority ethnic and religious groups.

The Indiana Klan rose to prominence beginning in the early 1920s after World War I, when ethnic Protestants felt threatened by social and political issues, including changes caused by decades of heavy immigration from southern and eastern Europe. It averaged 2,000 new members per week from July 1922 to July 1923, when he was appointed as the Grand Dragon of Indiana.

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