diff -ruN postgresql-7.4.1-old/src/bin/scripts/createuser.c postgresql-7.4.1/src/bin/scripts/createuser.c
--- postgresql-7.4.1-old/src/bin/scripts/createuser.c	2003-08-04 02:43:29.000000000 +0200
+++ postgresql-7.4.1/src/bin/scripts/createuser.c	2004-01-05 23:27:54.000000000 +0100
@@ -189,12 +189,12 @@
 	printfPQExpBuffer(&sql, "CREATE USER %s", fmtId(newuser));
 	if (sysid)
 		appendPQExpBuffer(&sql, " SYSID %s", sysid);
-	if (encrypted == +1)
-		appendPQExpBuffer(&sql, " ENCRYPTED");
-	if (encrypted == -1)
-		appendPQExpBuffer(&sql, " UNENCRYPTED");
 	if (newpassword)
 	{
+		if (encrypted == +1)
+			appendPQExpBuffer(&sql, " ENCRYPTED");
+		if (encrypted == -1)
+			appendPQExpBuffer(&sql, " UNENCRYPTED");
 		appendPQExpBuffer(&sql, " PASSWORD ");
 		appendStringLiteral(&sql, newpassword, false);
 	}