"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."
It's possible you're right, but that quote is irrelevant. That's about monopolies, specifically in the form of trade associations. Smith thought any kind of monopolies—trusts, unions, import duties—were bad, that's for sure.
I was talking about fabricated demand, which I don't have a quote for because I don't have my notes or copies of Wealth of Nations or Theory of Moral Sentiments with me at the moment. But my basic argument, even if he didn't explicitly treat the subject, would be that fabricated demand is an accumulation of capital, thereby increasing national opulence, which Smith holds as the highest good.
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."