THE DRAGON AND THE CROSS The Rise and Fall of the Ku Klux Klan in Middle America. By Richard K. Tucker. Illustrated. 224 pp. Hamden, Conn.: Archon Books. $27.50.

IN "The Dragon and the Cross: The Rise and Fall of the Ku Klux Klan in Middle America," Richard K. Tucker offers an instructive, narrowly focused look at a short, dark time in Indiana history: the 1920's, when the Klan held sway over state politics, with its leader aspiring to the United States Senate and even the White House. The book might have been subtitled "The Life and Times of D. C. Stephenson, Grand Dragon of the Klan," presenting as it does the colorfully sleazy life of a confidence man turned zealot and illuminating the times that made his rapid rise so effortless.

David Curtis Stephenson (1891-1966), a sometime printer and salesman, sensed around 1921 that his greed and political ambition might be rewarded if he joined the newly revitalized Ku Klux Klan. Rising quickly, Stephenson was given control of the Klan in Indiana in 1922. He was also handed the right to organize in 20 other states.

Soon he was a millionaire; he received a share of new members' initiation fees and sold members, at a good profit, their white sheets and hoods. Stephenson also controlled a secret, autonomous society within the Indiana Klan, the Military Machine, which had a quarter-million members. And he had pervasive influence over the state government. In 1924, Mr. Tucker writes, the Klan captured the government of Indiana by helping to elect closet Klansmen or pro-Klan candidates to office on the municipal, county and state levels, including Gov. Ed Jackson, many members of the state legislature and all but one member of the state's Congressional delegation.