Erich Neumann was born in Forst (Lower Lusatia) into a Protestant family. After receiving his high school diploma, he studied law and national economy in Freiburg, Leipzig and Halle. Wartime service (19141917) ultimately as First Lieutenant. In 1920, he served as governmental civil servant (Regierungsassessor) in the Prussian Ministry of the Interior, and thereafter in the Essen District Office. He became Senior Executive Officer (Regierungsrat) in the Prussian Ministry of Commerce in 1923. In 1927/28, he became District President (Landrat) in Freystadt (Lower Silesia), then served as Ministerial Junior Assistant Secretary (Ministerialrat) again in the Prussian Ministry of Commerce. In September 1932, he was appointed Permanent Secretary (Ministerialdirektor) in the Prussian Ministry of State in Charge of Administrative Reforms.
Compared to other top officials, Neumann joined the Nazi party very late; in May 1933, four months after Hitler took power. He joined the SS in 1934, being commissioned as a Major. In 1936, he was appointed the director of the Foreign Currency department of the Office of the Plenipotentiary for the Four Year Plan. By 1938, Neumann was promoted to undersecretary and attended Göring's meeting about the “Aryanization” of the German economy. Neumann represented the Ministries of Economy, Labor, Finances, Food, Transportation, and Armaments and Ammunition at the 1942 Wannsee Conference. He was interned and interrogated by the Allied forces in 1945, and released due to poor health in 1948.