Former broadcast executive and music historian Rick Busciglio tells this story: "In 1979, I was working with songwriter Jimmy Van Heusen on a TV special with Frank Sinatra and Bob Hope that was never produced. Jimmy told me that one day (circa 1942) he and his lyricist Johnny Burke were working at 20th Century-Fox composing for a film. While Burke was out of their writer's bungalow, Phil Silvers, the comedian, a friend to both, entered and suggested to Jimmy that they write a song for Johnny's wife, Bessie, who was soon to celebrate a birthday. Silvers provided the lyrics, later revised by Van Heusen and Burke. At the party they sang "Bessie... with the laughing face" It was such a hit that they used it at other female birthday events.
When they sang it as "Nancy... with the laughing face" at little Nancy Sinatra's birthday party, Frank broke down and cried thinking that it was written specially for his daughter - the trio wisely didn't correct him. Jimmy assigned his royalties to Nancy after Frank recorded it for Columbia."
Charles Pignone, Vice President of Frank Sinatra Enterprises, also recalled the story of how "Bessie (With the Laughing Face)" evolved into "Nancy (With the Laughing Face)" in a Songfacts interview: "Van Heusen was a pianist/songwriter and was friends with Frank, and at one point Frank heard him noodling on the piano and asked him what that was. Frank was with Phil Silvers, and he played it - they made a bet and Phil Silvers said, 'I bet that you if you give me a day I can write a better set of lyrics to that and I'll write it in honor of Nancy,' Frank's daughter."
Kevin from Reading , PaFrank liked the song so much that he recorded it a bunch of times, the earliest being 1944 or '45 and the last version in the late 70s. A funny story told in one of the Sinatra biographies centers around his then-flame, Ava Gardner, protesting Frank's decision to sing this song at a nightclub engagement that Ava was planning on attending in the early '50s. Even though the "Nancy" in the song is his daughter, Nancy was also the name of Sinatra's first wife, so Ava didn't like him singing it anymore, particularly since Frank had very publicly dumped her and left his family for the beautiful movie siren. Despite her protests, Frank performed the song anyway, telling her it was a "good luck charm" for him.