After graduating from Hillsdale College in Michigan and the University of Nebraska-Lincoln in 1897, Arnold set up his own company in Chicago at a time when railroads were converting their power sources from steam to electricity. In 1898, Arnold developed a new method of converting alternating current from power plants to direct current in substations for the Chicago & Milwaukee Electric Railway. This innovative electrification system would eventually become a standard in the interurban and street railway industries. Between 1898 and 1912, he assisted the New York Central Railroad and the Hudson River Railroad in conversion of their lines leading into the Grand Central Terminal.