Beginning about 1999, there have been stories passing around the Internet of the word's origin. There were claims about exploding ships, 'bad smelling steamship fuel', methane gas or organic fertilizer, in attempts to concoct an innocent explanation for the beloved vulgar term of potty-mouths. Apparently, they were only tales from the wild imaginings of a linguistic retentive hoaxter, as the word is much more ancient than any of the false explanations. Snopes.com has the real story:
"The word shit entered modern English language derived from the Old English nouns scite and the Middle Low German schite, both meaning 'dung,' and the Old English noun scitte, meaning 'diarrhea.' Our most treasured cuss word has been with us a long time, showing up in written works both as a noun and as a verb as far back as the 14th century.Now you can go eat lunch.
"Scite can trace its roots back to the proto-Germanic root skit-, which brought us the German scheisse, Dutch schijten, Swedish skita, and Danish skide. Skit- comes from the Indo-European root skheid- for 'split, divide, separate,' thus shit is distantly related to schism and schist. (If you're wondering what a verb root for the act of separating one thing from another would have to do with excrement, it was in the sense of the body's eliminating its waste 'a separating' from it, so to speak. Sort of the opposite of today's 'getting one's shit together.')