John A. Macdonald commissioned Nicholas Flood Davin to investigate the industrial school system of education for Natives in the United States and the possibility of establishing a similar system in Canada. Davin toured some American schools, spoke to the Commissioner of Indian Affairs there, and then consulted with knowledgeable persons in the Canadian West. The report, tabled in 1879, formed the basis of subsequent educational policy. Davin considered both the types of schools to be created and the manner in which they should be funded. The report rejected the idea of "day schools," which left children in their home environment and subject to the regressive influences of their families, as detrimental to assimilation. The still fluid situation in the Canadian West made a strict application of the American system of residential industrial schools unfeasible, and Davin recommended the establishment of both boarding schools on-reserve and centrally located residential industrial schools off-reserve, at least initially. Davin acknowledged a role for churches and missionary organizations in Native education, but suggested that denominational schools might not always be appropriate if they led to sectarian infighting. The report also evaluated funding procedures, considering both direct government funding and contract funding. Despite Davin's stated reservations on the effectiveness and benefits of contract funding, this was the system that was adopted.
The Davin Report received wide support from the government and churches, both of which were dedicated to the view that education was an important component of assimilation. Davin's recommendations appealed to those who saw the education of Natives as a duty, as well as to those who viewed education as a means to create a self-supporting people who would thereby become less dependent on government support. As a result, a number of boarding and residential schools were established, although day schools did not disappear. Despite serious problems including mismanagement and chronic underfunding, and the alarming prevalence of disease, malnutrition, physical and sexual abuse, and a high death rate, the system inaugurated by the Davin Report was maintained until 1969.