The son of a government official, was born in Würzburg, Germany, on 27th January, 1883. After attending schools in Ansbach and Munich, he studied engineering in Berlin and Zürich. In 1908 he started his own company constructing airplane hangers.

During the First World War Feder developed a hostility to Germany's wealthy bankers and in 1919 he published his Manifesto on Breaking the Shackles of Interest. According to Louis L. Snyder: "Feder became convinced that his country's economic ruin could be attracted to the manipulators of high finance. He favoured retaining the capitalist system, especially such productive assets as factories, mines, and machines, but he would abolish the idea of interest because it created no value."

On 30th May 1919 Captain Karl Mayr was appointed as head of the Education and Propaganda Department in the German Army in Munich. He was given considerable funds to build up a team of agents or informants and to organize a series of educational courses to train selected officers and men in "correct" political and ideological thinking. Mayr recruited Feder to give lectures to soldiers at Munich University. Corporal Adolf Hitler was one of those who attended his lectures.

On 7th March 1918, Anton Drexler set up a Committee of Independent Workmen. Drexler's idea was to form an organisation that would "combat the Marxism of the free trade unions" and to agitate for a "just" peace for Germany. His long-term objective was to create a party which would be both working class and nationalist. After six months it only had 40 members and in January 1919 decided to join with right-wing journalist, Karl Harrer, to form the German Workers's Party (DAP). Other early members included Feder, Hermann Esser and Dietrich Eckart. Harrer was elected as chairman of the party. The DAP was soon to have Hitler onboard and he soon advocated that the party should change its name to the National Socialist German Workers Party (NSDAP) and the Nazis were born.

When Hitler became Reichskanzler in 1933, he appointed Feder as State Secretary at the Reich Ministry of Economics, an appointment that disappointed Feder, who had hoped for a much higher position.