A long, long time ago, they used to ship manure (containing largely feces) on boats around the mediterranian. Well, the cargo was always on the lowest deck. The problem was, the boats back then would be farely leaky, and water would get in. When water and manure mixed, it would produce a large amount of methane. Careless and unknowing crew members at night would carry torches, and if they went below deck with enough methane, the ship would explode. To solve this problem, they simply started shipping them above deck so any gas could go out into the atmosphere. To make sure this was done, manure-containers would be labeled with "S.H.I.T.". This of course, stands for "Ship High In Transit"
As for how it became a vulgar term for feces itself is beyond me.
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