Copyright 2004 A.P. Lawrence
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The cpp (C preprocessor) will look in the current directory of the file being scanned, not the directory where you started the compile. It will first look in the "fredsource" directory. It will look other places if it does not find the referenced file. From the man page:
#include files with names enclosed in double-quotes (") are searched
for first in the directory of the file with the #include line,
then in directories named with -I options, and lastly, in directories
from the standard list. For #include files with names enclosed in
angle-brackets (< > ), the directory of the file with the #include
line is not searched.
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