From the new York Times article 'Back Together Again':
"In its crudest form, the art of reconstructing shredded documents has been around for as long as shredders have. After the takeover of the United States Embassy in Tehran in 1979, Iranian captors laid pieces of documents on the floor, numbered each one and enlisted local carpet weavers to reconstruct them by hand, said Malcolm Byrne of the National Security Archive at George Washington University. 'For a culture that's been tying 400 knots per inch for centuries, it wasn't that much of a challenge,' he said. The reassembled documents were sold on the streets of Tehran for years."
The article details that shredding documents, just like encrypting electronic data, has arms races on either side to both conceal and reveal.