So your current method is adding plaintext passwords to /etc/shadow.

Using your script as is... Created this. Mind you, I added a few digits at the end of your the password to match the standard 8 characters to suppress the "are you sure" prompts.

user1:abcXYZ123:16963:0:99999:7:::user2:DEFxyz142:16963:0:99999:7:::user3:ijkLM1564:16963:0:99999:7:::

The users files

[root@localhost ~]# cat t.txt s.txtuser1 abcXYZ123user2 DEFxyz142user3 ijkLM1564user4 abcXYZ123user5 DEFxyz142user6 ijkLM1564

The Script

#!/bin/bash -e#Adding user1, user2, user3 using your method.file_name="t.txt"while read user passdo    #useradd ${user} -p ${pass}    useradd -p ${pass} ${user}    echo "Adding user "${user}"  with the password  "${pass}done < $file_name#Adding user4, user5, user6 using the recommended method.file_name="s.txt"while read user passdo    #useradd ${user} -p ${pass}    useradd ${user}    echo "${pass}" | passwd --stdin ${user}    echo "Adding user "${user}"  with the password  "${pass}done < $file_name

Using both syntaxes, produced these results in /etc/shadow

user1:abcXYZ123:16963:0:99999:7:::user2:DEFxyz142:16963:0:99999:7:::user3:ijkLM1564:16963:0:99999:7:::user4:$1$NpazYQAn$tlhfQLlP0CaFiUeNeK8HW.:16963:0:99999:7:::user5:$1$4z8G4gvh$v0jzcV5xbhWixU1LG9mwW.:16963:0:99999:7:::user6:$1$cBkcYJkJ$7A.j6E3gy/umUcVmY0tgt0:16963:0:99999:7:::

So, therefor the method I posted works. Update: Ubuntu working method below. This the stdin is confirmed for Rhel based systems.

useradd ${user}echo "${pass}" | passwd --stdin ${user}

If your heart is absolutely set on using that method, I would suggest installing mkpasswd and using this syntax.

 useradd -p $(mkpasswd ${pass}) ${user}

Update for Ubuntu Passwd stdin

echo ${user}:${pass} | /usr/sbin/chpasswd