The recriminations that followed Fredericksburg led to a famous general order in which army commander Maj. Gen. Ambrose Burnside proposed to dismiss several of the senior officers of the army. President Abraham Lincoln prevented this order from taking effect and relieved Burnside of his command instead. Smith was one of the affected officers, but it is to his credit that he did not leave the Army. However, his indiscretion in communicating to Lincoln directly about Burnside's shortcomings, compounded by the fact that Smith was a close friend of out-of-favor Maj. Gen. George B. McClellan, resulted in his losing both his corps command and his rank; the Senate failed to confirm his nomination to major general, which expired on March 4, 1863. Reverting to the rank of brigadier general, he commanded a division-sized force of militia within the Department of the Susquehanna in Pennsylvania during the critical days of the Gettysburg Campaign, repelling Maj. Gen. J.E.B. Stuart at a skirmish in Carlisle. Smith's green troops then participated in the unsuccessful pursuit of Gen. Robert E. Lee back to the Potomac River. He followed this in division command in West Virginia.