road projects, the state introduced its first gasoline tax. Ku Klux Klan The Indiana Ku Klux Klan had been rising in power over the past decade in Indiana. Although it was unknown to McCray at the time, over half the members of the Indiana General Assembly were klansmen. Several members of the administration were also klansmen including Indiana Secretary of State Edward L. Jackson. In 1921, the General Assembly passed a bill to approve a "Klan Day" at the state fair, complete with cross-burnings and other Klan trappings. McCray promptly vetoed the bill, angering Klan leaders. The Klan gained even more influence in the government in the following year, and Edward Jackson granted the Klan a state charter and officially recognized their organization. McCray was angry with Jackson over the action, and demanded it be rescinded and threatened to take the measure to court, claiming that no organization could receive a charter unless its leaders would reveal themselves and sign the charter. Grand Dragon D.C. Stephenson ordered Jackson to offer McCray a bribe to change his mind. Jackson offered McCray US$10,000 if he would fill several public offices with Klan members. McCray, a millionaire, declined the bribe and was offended. The dealing was behind the scenes and not made public. Loan scandal Land values in Indiana collapsed during the early 1920s and severely hurt McCray's financial position because of his large involvement in land speculation. Although he owned nearly $3 million in assets, he was faced with bankruptcy, but was disturbed at the thought of losing his beloved farm. He took a loan from the State Agricultural Board for $155,000 and deposited into his personal account to cover his debts. He then began soliciting loans from banks by creating fake promissory notes and using them as collateral. Bank officials later claimed that they were coerced by the governor, who hinted that he would remove state deposits if they did not grant him the loans. Klan members soon found out about McCray's dealings and decided to use the situation to force him out of office. The Indiana Attorney General brought McCray up on charges of embezzlement regarding the loan he took from the agricultural board. By then, however, he had already repaid the loan to the board with the help of several friends. The case ended in a hung jury on April 11, 1924. On April 21, he was brought up