Despite living in the United States around the same time (Croly was about a generation younger than Sumner), these two men had vastly different views on politics, economics, and society in general.
William Graham Sumner was educated as an economist (at Yale, no less), but branched out into topics that were previously outside the realm of what economists normally study; today we would call him a sociologist, and in fact he is often considered one of the founders of modern sociology. (He actually preferred the term "societologist".) He made a number of important advances in understanding human behavior, such as the realization that humans form "in-groups" and "out-groups". (He actually coined the word "ethnocentrism".)
Herbert Croly studied at Harvard for a few years, but dropped out to help his father, who was dying of a chronic illness. He went back for awhile later, but never did finish his degree. Little is known about his life after that, up until the point where he published his magnum opus, a political treatise called The Promise of American Life.
Both Sumner and Croly shared the basic American values of "life, liberty, and the pursuit of happiness"; but they interpreted the application of these values quite differently.
For Sumner, liberty was a negative concept---freedom from interference. Likely in part due to his training as a classical laissez-faire economist (as well as his interpretation of Darwin's recently published theory of evolution), he viewed human beings as atomistic self-interested individuals who would best achieve their goals if they were left alone to pursue them without restraint. It is in some ways ironic that he spent so much time studying society, because he didn't really believe in society as a meaningful concept; he saw human beings as isolated individuals who simply happen to interact when it serves their self-interest---he called this "antagonistic cooperation".
As a result, Sumber advocated for a very minimalistic government, one which would protect basic property rights and maintain national defense but do little else, not intervening to provide public goods such as infrastructure or education and certainly not making any attempt to transfer or redistribute wealth from the rich to the poor---he viewed the latter especially as dangerous, seeing it as undermining the freedom and efficiency of the free market system. He was also influenced by Herbert Spencer, the founder of Social Darwinism, who believed that policies which supported the less-fortunate would only serve to undermine the process of natural selection and send human evolution toward inferiority and decay. Graham believed that the best course of action was to avoid intervention and let human societies evolve in their "natural progression", which he believed would ultimately lead to the best outcome for all.
For Croly, liberty was a positive concept---freedom to achieve your potential. He viewed human beings as parts of a greater whole, working together to achieve what we could not on our own. For him, the greatest threat to liberty was not others actively preventing actions, but a lack of resources necessary to act---particularly poverty. He argued that the Jeffersonian vision of rugged individualism was simply not viable anymore in an industrialized economy, and a new system was needed where the government would support and stabilize the system and ensure everyone got their fair share. He was openly in favor of "big government"; he argued that government should not only provide basic functions such as national defense, but take on a much broader role in human life, building infrastructure, providing education, and redistributing wealth. He even argued that many corporations should be nationalized and turned into public utilities.
Overall, Croly largely won the argument, especially in the short run; the role of government in public life greatly expanded in the 1930s and 1940s and remained very large until at least the 1980s when a new current of laissez-faire ideas returned under Ronald Reagan. Even today very large government programs such as Social Security and Medicare are largely uncontroversial, and the debate over other programs such as income taxes and infrastructure construction is largely one of degree rather than kind.
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