Smith remained in that assignment until September 1926, when he was promoted to Commander and reported for duty to Naval Torpedo Station at Newport, Rhode Island, as Manufacturing officer. By the end of July 1929, he was appointed commanding officer of gunboat "Sacramento" operating with the Special Service Squadron in Central American Waters. Smith participated in the patrols along the coast of Nicaragua during the protection of American interests there and was commended by the Secretary of the Navy, Charles F. Adams III for salvaging the steamer "Heilo", which had run aground at the entrance of Harbor of Corinto and was blocking the entrance to that harbor. He also received Nicaraguan Presidential Medal of Merit with Diploma from President Adolfo Díaz.