Local authorities in their respective jurisdiction may in their discretion subject to the approval of the department authorize by ordinance higher speeds than those stated in section 321.285 upon through highways or upon highways or portions thereof where stop or yield signs have been erected at the entrances thereto provided signs are erected giving notice of the authorized speed, but local authorities shall not have authority to authorize by ordinance a speed in excess of fifty-five miles per hour. If local authorities fail to authorize by ordinance higher speeds than those stated in section 321.285 upon through highways or upon highways or portions thereof where stop signs have been erected at the entrances thereto, the department may recommend, upon the basis of an engineering and traffic investigation, to the local authorities that the speed limit be increased. If local authorities fail to increase the speed limit upon said recommendation of the department, said department shall declare a reasonable and safe speed limit which shall be effective when appropriate signs are erected giving notice thereof.