diff --git a/libguile/Makefile.in b/libguile/Makefile.in
index 26ad9b37c..c1da76e98 100644
--- a/libguile/Makefile.in
+++ b/libguile/Makefile.in
@@ -37,9 +37,9 @@ exec_prefix = @exec_prefix@
 # Directory in which to install init files &c
 libdir = @libdir@
 
-# Directory for installed #include files
+# Directory for installed #include files for all packages
 includedir = @includedir@
-pkgincludedir = $(includedir)/guile$(VERSION)
+innerincludedir = $(includedir)/libguile
 
 # Directory to install `guile' in.
 bindir = @bindir@
@@ -56,12 +56,15 @@ ETAGS = etags
 CTAGS = ctags -tw
 
 # CC
-X11_INCLUDES =		@XINCLUDES@
-XFLAGS = @X_CFLAGS@
-CFLAGS = @CFLAGS@ 
-INCLUDE_CFLAGS = -I. -I$(srcdir) 
-ALL_CFLAGS = $(CFLAGS) $(X_CFLAGS) $(INCLUDE_CFLAGS) $(X11_INCLUDES) -DLIBRARY_PATH=\"$(pkgdatadir)/\" @DEFS@
-CC = @CC@ $(ALL_CFLAGS) -Wall
+X11_INCLUDES=@XINCLUDES@
+XFLAGS=@X_CFLAGS@
+CFLAGS=@CFLAGS@ 
+# Check for headers in $(srcdir)/.., so that #include
+# <libguile/MUMBLE.h> will find MUMBLE.h in this dir when we're
+# building.
+INCLUDE_CFLAGS=-I. -I$(srcdir)/.. -I$(srcdir)
+ALL_CFLAGS=$(X_CFLAGS) $(INCLUDE_CFLAGS) $(X11_INCLUDES) @DEFS@
+CC=@CC@ $(ALL_CFLAGS) -Wall
 
 # CC used as a front end for ld
 LDFLAGS = @LDFLAGS@
@@ -143,9 +146,14 @@ libobjs=	alist.o \
 		$(extras)
 
 
+# These are headers used only by the internal guile sources.
 uninstalled_h_files= _scm.h
 
-installed_h_files= __scm.h \
+# These are headers visible as <mumble.h>.
+installed_h_files = libguile.h
+
+# These are headers visible as <libguile/mumble.h>.
+inner_h_files= __scm.h \
 		alist.h \
 		append.h \
 		arbiters.h \
@@ -172,7 +180,6 @@ installed_h_files= __scm.h \
 		init.h \
 		ioext.h \
 		kw.h \
-		libguile.h \
 		list.h \
 		load.h \
 		mallocs.h \
@@ -217,7 +224,7 @@ installed_h_files= __scm.h \
 		vports.h \
 		weaks.h
 
-h_files=$(uninstalled_h_files) $(installed_h_files)
+h_files=$(uninstalled_h_files) $(installed_h_files) $(inner_h_files)
 
 c_files=	alist.c \
 		append.c \
@@ -365,6 +372,7 @@ ancillary =	gscm.c \
 		ChangeLog.scm \
 		Makefile.in \
 		acconfig.h \
+		aclocal.m4 \
 		configure \
 		configure.in \
 		scmconfig.h.in \
@@ -374,7 +382,6 @@ ancillary =	gscm.c \
 c_sources = $(c_files) $(h_files)
 manifest = $(ancillary) $(c_sources)
 
-
 .SUFFIXES:
 .SUFFIXES: .o .c .h .ps .dvi .info .texinfo .scm .x
 
@@ -385,7 +392,7 @@ manifest = $(ancillary) $(c_sources)
 	else \
 	  fake_scmconfig=0; \
 	fi; \
-	$(CC) $(ALL_CFLAGS) -I. -DSCM_MAGIC_SNARFER -E $< | grep "^%%%" | sed -e "s/^%%%//" > $@ ; \
+	$(CC) -DSCM_MAGIC_SNARFER -E $< | grep "^%%%" | sed -e "s/^%%%//" > $@ ; \
 	if test $$fake_scmconfig -eq 1 ; then \
 	  rm scmconfig.h; \
 	else : ; \
@@ -394,6 +401,10 @@ manifest = $(ancillary) $(c_sources)
 .PHONY: all
 all: libguile.a
 
+libpath.h: Makefile
+	echo '/* generated by Makefile */' > libpath.h
+	echo '#define LIBRARY_PATH "$(pkgdatadir)/"' >> libpath.h
+
 # The `dist' target in the top-level Makefile uses this `dist-dir'
 # target to select the appropriate files for distribution from the
 # directory containing this Makefile.
@@ -422,21 +433,22 @@ libguile.a: $(libobjs)
 install: all
 	test -d $(prefix) || mkdir $(prefix)
 	test -d $(libdir) || mkdir $(libdir)
-	test -d $(includedir) || mkdir $(includedir)
-	test -d $(pkgincludedir) || mkdir $(pkgincludedir)
 	$(INSTALL_DATA) libguile.a $(libdir)/libguile$(VERSION).a
-	$(INSTALL_DATA) scmconfig.h $(pkgincludedir)
-	for h in $(h_files); do \
-	  $(INSTALL_DATA) $(srcdir)/$$h $(pkgincludedir); \
+	ln -f -s libguile$(VERSION).a $(libdir)/libguile.a
+	test -d $(includedir)	   || mkdir $(includedir)
+	test -d $(innerincludedir) || mkdir $(innerincludedir)
+	for h in $(installed_h_files); do \
+	  $(INSTALL_DATA) $(srcdir)/$$h $(includedir); \
+	done
+	for h in scmconfig.h $(inner_h_files); do \
+	  $(INSTALL_DATA) $(srcdir)/$$h $(innerincludedir); \
 	done
 
 uninstall:
-	-for h in $(h_files); do \
-	  rm -f $(pkgincludedir)/$$h; \
-	done
-	rm -f $(pkgincludedir)/scmconfig.h
-	-rmdir $(pkgincludedir)
 	-rm $(libdir)/libguile$(VERSION).a
+	-rm $(libdir)/libguile.a
+	-rm -rf $(guileincludedir)
+	-rm $(includedir)/guile
 
 
 TAGS:
@@ -449,6 +461,7 @@ clean:
 	-rm -f libguile.a
 	-rm -f $(libobjs)
 	-rm -f $(gen_c_files)
+	-rm -f libpath.h
 
 distclean: clean
 	-rm -f config.cache
@@ -627,7 +640,7 @@ feature.o: feature.c _scm.h libguile.h __scm.h tags.h smob.h params.h \
  posix.h print.h procprop.h procs.h ramap.h read.h root.h scmsigs.h \
  sequences.h simpos.h socket.h srcprop.h stackchk.h stime.h strings.h \
  strop.h strorder.h strports.h struct.h tag.h throw.h unif.h \
- variable.h vectors.h version.h vports.h weaks.h feature.x
+ variable.h vectors.h version.h vports.h weaks.h libpath.h feature.x
 files.o: files.c _scm.h libguile.h __scm.h tags.h smob.h params.h \
  alist.h append.h arbiters.h async.h boolean.h chars.h continuations.h \
  debug.h options.h dynwind.h eq.h error.h pairs.h eval.h extchrs.h \